With economies around the globe looking to reopen, the growth factor could be back in the driver’s seat following a decade-long bull run. However, with value back in the fray following the pandemic sell-off, can it still thrive in a post-COVID world?
“I have not thought about investing any differently since I have been in the asset management trade and it has worked for us and worked for the organizations that I worked for previously from 2003 to 2015. In 2016 and 2017, we did reasonably well,” said Kenneth Andrade, Founder & CEO of PMS firm Old Bridge Capital. “We did far better than most of the benchmark indices and the peer group, trying to go where parts of the market were completely ignored and we were able to capitalize on opportunities.”
“I think 2018 and 2019 were two years where it has been a little difficult to find opportunities or momentum,” Andrade added. “So I am very much old school. There is a certain level of asset valuation that is there and there is a certain capital efficiency norm that companies have to adhere to for them to become significantly large or attract more capital and capital will get expensive over a period of time.”
So, in summation, does Andrade think value investing works?
“So I belong to that part of the world and I am sure if I can just put 2019 behind, I do not think we will have to revisit how value investing works,” he added. “So it works. It worked across multiple cycles, it worked in my favor for the last two decades and it has just been one year that it has been off-color but apart from that, it has been fine.”
For ETF investors looking for value plays, one ETF play that’s worth a look involves sifting through the Nasdaq to find value via the Principal Contrarian Value Index ETF (PVAL). PVAL seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq U.S. Contrarian Value Index (the “index”).
Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies that compose the index at the time of purchase. The index uses a quantitative model designed to identify equity securities in the Nasdaq US Large Mid Cap Index (the “parent index”) that appear to be undervalued by the market relative to their fundamental value.
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