Long Live Value Investing
As rates rise, value stocks may be ripe for a comeback.
Growth stocks have crushed value stocks over the past decade: The Morningstar US Growth Index has an annualized return of 12.4% through August, compared with 9.3% for the Morningstar US Value Index. The difference is particularly pronounced over the past year: 30.5% versus 14.7%. Is it time for a turnaround? I spoke with two top value managers who believe that rising interest rates may finally reverse that dynamic. We explored what that might mean at a sector, market-cap, and global level.
David Green, principal at Hotchkis & Wiley, is a portfolio manager on two funds that are Morningstar Medalists, Hotchkis & Wiley Small Cap Value (HWSIX) and Hotchkis & Wiley Value Opportunities (HWAIX). Charles Pohl, chairman and chief investment officer at Dodge & Cox, is a member of the investment committees running five Gold-rated funds, including Dodge & Cox Global Stock (DODWX). Our conversation took place on Aug. 23 and has been edited for length and clarity.
Kevin McDevitt does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.