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The “great rotation” to Value began towards the end of 2020 as inflation fears came into focus. It has been rewarded.
Since Dec 2020, the MSCI World Value factor has delivered +21.43% returns to 25th February 2022 compared to +7.70% return for Growth factor and +14.78% for the parent MSCI World index (a traditional market-cap based index), all in GBP terms.
If we look back further at relative performance since end 2007 to 25-Feb-22, we can see that Value’s underperformance relative to Growth is still material.
Over that period, Growth returned +369% (11.54%pa), compared to +179% (7.52%pa) for Value, and +268% (9.63%pa) for traditional market-cap based world equities, in GBP terms.
On this basis, the re-rating of Value, relative to Growth, has room to run in the face of a persistent inflationary regime.
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