A Passport To International Value

By Todd Shriber via Iris.xyz

Over the past year, ex-US developed markets equities are lagging their U.S. counterparts. As highlighted by a 12-month decline of 10.64% for the MSCI EAFE Value Index (as of Nov. 9, 2018), value stocks have not been immune to that trend.

Whether it is on a domestic or international basis, value has spent considerable time in recent years being unloved relative to growth and momentum. The out of favor status of developed markets stocks and the value factor could be poised to change.

“Given the increasing bearish mood of global markets and the historically low current valuations of the value strategy after long periods of underperformance, conditions appear to be ripe for the long-awaited value resurgence,” said Andrew Lapthorne, the head of equity quantitative research at Societe Generale.1

The laggard status of developed markets outside the U.S. is also notable. At the end of the third quarter, the MSCI USA Index was positive on year-to-date basis, but a dozen other MSCI benchmarks focusing on major developed economies, including Australia, Japan, Switzerland and the U.K., were in the red.

Areas Of Opportunity

Not all markets are currently offering value propositions. Fortunately for investor considering value wagers, some of the larger, least volatile developed markets outside the U.S. are showing some signs of value rebounds. Those include the U.K. and Japan, among others.

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