Value’s Value | 1 September 2020

PERSPECTIVES

The enigmatic performance of Value has been a hot issue in investment circles over the least few weeks. Where do we go from here? Our team takes a closer look.

Since 2007, the Value category has lagged Growth. Key to its underperformance has been the underweighting of the high-priced tech sector in the portfolio allocation. Though Growth drives performance, advisors aren’t ready to throw in the towel on Value as a strategic position in a diversified portfolio.

A Portformer Value analysis finds great alternatives to MGV, a $3B fund with higher weightings in financial and healthcare and VONV, a lower cost selection at 8 bps.

For those considering a heavier tilt toward technology within Value, we suggest looking at a newer fund from American Century with $137M in AUM.

Debate over traditional views of Value will only grow as technology continues transforming stalwart industries.

What We’re Reading

• Simplify, Scale, Succeed with Model Portfolios – Investment article that discusses the proliferation of model portfolios and how the business has changed.
• Why It’s So Hard to Beat the Market ? – Forbes article by wealth manager columnist on how the concentration of performance in the a small subset like FAANG stocks makes navigating the markets difficult.
• Are Tech IPOs Worth the Hype ? – Infographic from the Visual Capitalist on the hype vs reality of Tech IPOs over the last several decades.
• Deep Value ETF Report – August 2020 – Article from the Capital Spectator newsletter on the performance of asset classes over the last 5 years in the ETF space.
• Financial Advisors Should Use Tech and Fintech Tools to Boost Their Practice During COVID-19 – Barron’s article from Joel Bruckenstein on how advisors are leveraging more technology during the pandemic to push their business forward.
• Putting 2020 into Perspective: Diversification May Work Better Than You Think – Blog post at All About Alpha that shows data and discusses the benefits of diversification during major drawdown periods.
• Out of Chaos Comes Order and Consequences – Article from endowment risk strategist on steps taken to protect assets through governance, risk management and business continuity.
• Beware Momentum’s Comeback  – Post at ETF.com that discusses momentum strategies and how they have fared during their period.
• Why Oaktree is More Conservatively Positioned than Usual – Follow-up article on the recent client letter from Howard Marks at Oaktree on steps the firm is taking to create resilience to another potential market downturn.

Connect with Us

Hop on a quick, scheduled 15 min Zoom call with us and explore some new ideas about how to engage your clients and families. 

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Have a great week!

Best,

John DiBenedetto and the Portformer Team