Is 'deeply unpopular' value investing poised for recovery?

Rate rise could boost style

Value investors are being forced to sit out a prolonged period of underperformance for the management style, as 'extreme' market dislocations caused by central bank policies have boosted the appeal of growth counterparts.

According to Templeton Global Equity Group, value has underperformed growth for the longest period on record and, as of the end of August, was trading at the widest valuation discount to growth since the dotcom bubble of the late 1990s. Its recent figures show a 75% discount to growth in terms of price-to-tangible book value - two standard deviations below the average long-term level. The group said the "paltry" yields offered by government bonds have forced investors up the risk curve into higher-yielding debt securities or equities, with growth highly sought after. However, it warns...