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21 November 2024

Home / White Papers 2023

Value investing myths, debunked

Growth shares have outperformed strongly in recent time. Between 2007 and 2021 the MSCI World Growth Index returned an incredible 11% p.a. (in AUD terms), beating the Value Index by about 4.5% p.a. The ‘exciting’ companies behind that stellar performance, like Atlassian and Afterpay, left their more boring, ‘old economy’ counterparts in their wake.

Charlie Munger once said, “all intelligent investing is value investing – acquiring more than you are paying for”. But in recent years the market seemed much more interested in what it got, than what it paid.

Value investing, in the doldrums for most of the last 15 years, staged a modest comeback in 2022. The MSCI World Value Index recovered about a third of its 2006-2021 losses relative to the equivalent Growth Index, and now asset allocators are reassessing and debating the role value investing plays in diversifying portfolios.

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