Dollar Amount of M&A Activity Has Influenced Value Performance
- The Russell 1000 Value Index outperformed the Russell 1000 Growth Index by an average of 3.22% when the dollar amount of M&A deals rose from the year prior. The dollar amount of M&A activity this year has already exceeded that of 2013.2
- The win rate — or the number of times M&A dollar amount rose and value outpaced growth — has historically was 87.5%.
While the quantity of M&A transactions may be strong compared with last year, it’s still below the highs after the Great Recession — suggesting that M&A activity is far from overheating and there’s potential for further activity. A continuation of recent trends would be positive for the value factor, in my view.
Learn more about PowerShares Dynamic Large Cap Value Portfolio (PWV), which offers exposure to the value factor.
1 Source: Bloomberg L.P., as of Aug. 21, 2014
2 Source: Bloomberg L.P. and Invesco PowerShares, as of Aug. 21, 2014
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This articles was written by Invesco PowerShares Senior Equity Product Strategist Nick Kalivas.