Value investing will have its day in the sun once again but this may take time, according to the guests on the latest FTAdviser podcast.
Andrew Bell, chief executive of the Witan Investment Trust, said the current pandemic has helped traditional growth stocks in the technology sector as consumers have switched their buying habits, while at times of economic uncertainty investors favour consumer stocks such as Unilever, where demand is constant.
Mr Bell said over the next one or two years he anticipates value stocks will perform better, but he added: “I would still want to have growth in my portfolio on a ten-year view, but for the next one or two years I think value will come back.”
Jamie Ward, UK equity manager at Crux, said growth companies had done well because “people can look into the future”.
He said they see the earnings that can be achieved by growth companies such as Unilever, while other companies on the market, which are by nature value investments and more dependant on the outlook for the wider economy to grow, were harder to predict.
But he said the gap in valuations between growth and value was currently extreme.
Sunil Krishnan, multi-asset investor at Aviva Investors, said 2020 “looked like the year value would perform better” until the pandemic struck.
He said: “The question of growth versus value is one that has been asked for the past five years, and looking at where valuations are now, it is right to be asking that question again now.”
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david.thorpe@ft.com