- US Value has fared well during periods of high inflation. Since 1975, US Value stocks tend to outperform Growth stocks in the 12-month and 24-month after headline CPI surpasses 3% for a sustained period of time.
- US Value have also fared well during rate hike cycles, even when the Fed pauses. Since 1975, there have been eight major rate hike cycles and US Value has outperformed in four of them. While an end to the current rate hike cycle may be near, a Fed pause until 2024, would mean tight monetary policy year-round and a long runway for Value to shine.
- US Value and Growth performance have closely tracked US financial conditions. Tighter financial conditions tends to drive broad equity weakness but Value is likely to display greater resilience.
- Entering 2023, we continue to see merits in US Value as performance should be supported by the macro backdrop of high inflation, rate hikes, and tighter financial conditions. Value remains our preferred approach for exposure to US equities. We recommend the JPMorgan Funds - US Value A (acc) USD.
Chart 1: The outperformance between US Value and Growth is the most prominent globally
1. Outperformance during high inflation
Table 1: US Value stocks tend to outperform Growth stocks in the 12-month and 24-month after headline CPI surpassed 3%
2. Outperformance during rate hike cycles, including Fed pauses
Table 2: US Value stocks tend to outperform Growth stocks during rate hike cycles, including a Fed pause, particularly if the average inflation level are high
Chart 2: A visual display of table 2 – US Value-Growth performance during rate hikes and the corresponding inflation levels
3. Outperformance during tighter financial conditions
Chart 3: US Value - Growth performance has closely tracked US financial conditions
US Value leadership to continue
The Research Team is part of iFAST Financial Pte Ltd
All materials and contents found in this site are strictly for general circulation and informational purposes only and should not be considered as an offer, or solicitation, to deal in any of the funds or products found/identified in this site. While iFAST Financial Pte Ltd ("IFPL") has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies and typographical errors. Any opinion or estimate contained in this report is made on a general basis and neither IFPL nor any of its servants or agents have given any consideration to nor have they or any of them made any investigation of the investment objective, financial situation or particular need of any user or reader, any specific person or group of persons. You should consider carefully if the products you are going to purchase are suitable for your investment objective, investment experience, risk tolerance and other personal circumstances. If you are uncertain about the suitability of the investment product, please seek advice from a financial adviser, before making a decision to purchase the investment product. Past performance is not indicative of future performance. The value of the investment products and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. In respect of any matters arising from, or in connection with the said research analyses or research reports, recipients of the report are to contact IFPL at 10 Collyer Quay, #26-01 Ocean Financial Centre Building, Singapore 049315, or by telephone at +65 6557 2853. Where the report contains research analyses or research reports from a foreign research house and if the recipient of such research analyses or research reports is not an accredited investor, expert investor, institutional investor or an ex-accredited investor, IFPL accepts legal responsibility for the contents of such analyses or reports to such persons only to the extent as required by law. Please note that only certain security(ies) herein are available to all investors, while the rest are only available for certain persons to invest in, such as Accredited Investors (as defined in the Securities and Futures Act) or one who invests at least S$200,000 (or its equivalent currency) per transaction. To qualify as an Accredited Investor, one needs to submit a declaration form and certain relevant supporting documents, according to iFAST’s prevailing policies and procedures.
Please read our full disclaimers on the website at ( https://secure.fundsupermart.com/fsmone/policies/328125/investment-account-terms-&-conditions).
iFAST Financial Pte Ltd (IFPL) (registered address: 10 Collyer Quay #26-01 Ocean Financial Centre Singapore 049315, Telephone: 6557 2000) holds the Financial Advisers Licence issued by the Monetary Authority of Singapore ('MAS') to conduct regulated activities of advising on securities, marketing of collective investment schemes and arranging of any contract of insurance in respect of life policies, other than a contract of reinsurance and the Capital Markets Services Licence issued by the MAS to conduct regulated activities of dealing in securities and providing custodial services for securities. While IFPL has made every effort to ensure the independence of the report's contents, IFPL's nature of business is such that IFPL and its connected and associated entities together with their respective directors, officers and staff may be involved in providing dealing or investment-related services in the abovementioned securities, and have taken or may take positions in the securities mentioned in this report, and may also act as the principal for any buy or sell trades.