Who Are The Best Investment Managers for Factor Risk Investing?
Funds, Strategies & Investment Manager Selection
Tech Is Changing
The definitions of growth and value stocks may not change. But the companies that make up each cohort is changing fast in the current environment.
The story around the recent fall in Netflix has been well covered in the media. A first-mover disruptor, delivering high growth that joined a cohort of technology stocks that became the darlings of the COVID era. Only to be tumbled by the reality that growth may have a ceiling.
Whilst many market commentators have been warning about a repeat of the 2000 dot com era for some time now, they miss the real question on professional investors minds.
Have yesterday's Growth Stocks become tomorrow's Value Stocks?
ON INVESTORS MINDS
Factor risk performance comparisons show value outperforming. But behind the numbers, the story is not as simple as it seems.
In 1Q22 the Value Factor clearly outperformed other Factor Risks such as momentum, growth, quality and size. But digging deeper into the explanatory variables, tells a tale of dispersion and extremes.
What can investors expect from each factor risk going forward?
Read the latest analysis from Factor Risk investment managers inside RFPnetworks.
ONE TO WATCH
The preference for Value or Growth style tilts for portfolios changes along the business cycle. Today, value stocks exhibit compelling characteristics.
What Style Makes More Sense in the Current Environment?
Common wisdom is that Growth stocks outperform in low-inflation, low-interest rate environments. But they can be vulnerable when rates rise and the value of their future earnings potential is reduced. Characteristics that Value stocks can cushion in a rising rate, inflationary environment. But is it that simple?
Read the latest views from the factor risk and style investors inside RFPnetworks.
Choose Regions Wisely
Factor risks perform differently in a rising rate environment. And importantly, the differences between value, growth and min vol can also vary by region.
The current rising rate, inflationary environment is causing investors to re-think their recent long term overweight to growth stocks. For multiple reasons.
The question is whether the value factor will provide the downside protection needed. And at the same time, outperform the growth style. Or is it time to revisit the low volatility factor?
The answer may depend on which market or region you are looking to gain exposure to.
Start your search using the latest tools on RFPnetworks.
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