Global Value [[{“value”:”
In 2024 our Global Value Equity strategy generated a +6.1% net return, compared to +7.7% for the MSCI World Equal Weight Index and +18.7% for the MSCI World Index which benefited from a heavy dose of mega cap growth stocks in the U.S.
In 2024, the cap-weighted index outperformed its equal weight counterpart by 11 percentage points, after it outperformed by 7.1 percentage points in 2023. These are the third and fourth widest differentials in a calendar year over the 30 years since the inception of the MSCI World Equal Weight Index in 1995. It may feel like the dominating performance of U.S. mega-cap growth stocks will go on forever, but the data lead us to expect otherwise. Historically, whenever the cap-weighted index has outperformed the equal-weight index by the widest margins the following five years experienced a reversal, with the equal-weight index substantially outperforming. Furthermore, in those same environments, value stocks outperformed by even more.
We underperformed the +11.5% return of our style benchmark, the MSCI World Value, mostly due to the strong performance of international banks, which we avoid due to their extreme tail-risk, and lack of analyzability. Avoiding banks has been a long-term positive, as they have delivered negative compound returns over the past twenty years. That said, even bad industries can have a good year or two, and we believe that was the case in 2024.”}]]
