Research Affiliates: Are we seeing an inflection point for value investing?

Investment style out of favour for years

Global strategist Research Affiliates has urged value investors to sit tight, as the current environment may mark an "inflection point" for the investment style, which has suffered significant underperformance in recent years.

The report, written by Charles Aram, head of EMEA, Research Affiliates Global Advisors (Europe), and Jonathan Treussard, senior vice president, product management, acknowledged value strategies have had a tough time over the past several years, but noted they outperform over the longer term. The researchers found the long-term tracking error (1962-2015) of the FTSE RAFI US 1000 relative to the S&P 500 index was 4.2%, annualised, but said the value-tilted strategy could outperform by as much as 20% in the right market conditions. Contrarian: The changing face of value investing They...