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By Canada Life | Apr. 13, 2023

With today’s rising interest rates, increased inflation and market volatility, the strategy may provide investors with some stability in their portfolios.

Our latest report offers insights on how value investing can help support a balanced portfolio. While the steady increase in market valuations over the past decade has been largely driven by growth stocks, analysts are advising the time may have come for value investing.

Value investing is making a comeback

  • Current economic conditions are resulting in value investing coming back in favour
  • Investor pessimism and market and economic drivers may cause some stocks to become undervalued
  • Now is a good time to understand and assess the value allocation in your portfolio

Higher interest rates make value more attractive

  • During periods of high interest rates value stocks may tend to outperform growth stocks
  • Check your portfolio to see if it has a disproportionate weighting to growth with respect to your risk tolerance 

Patience is important

  • Value investing should be viewed as a long-term strategy.
  • It may take many years for a stock’s price to match its intrinsic value 

Active management matters

  • Look for a manager who’s able to layer on strong fundamental analysis, including qualitative inputs such as understanding a management team’s strategy, credibility and long-term vision 

Diversification is key

  • Value investing shouldn’t be looked at in isolation
  • Value and growth both have a role to play in a well diversified portfolio
  • Incorporate a balanced approach as no one investment style can be expected to always be dominant
  • Ensure your portfolio is appropriately diversified across investment styles to help you capture upside and mitigate downside risk

Get the report to learn more about the value investing approach and how your clients can benefit from this strategy.

This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon as research or investment advice regarding any strategy or security in particular.

The views expressed in this commentary are those of this investment manager as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice.

Canada Life and design, Canada Life Investment Management and design, and other marks followed by the TM symbol at first time of use are trademarks of The Canada Life Assurance Company. Other marks displayed in this piece are trademarks of a third party and used with permission or under license.