Value investors likely winners in current environment
Despite stagflation fears and de-rating of high-flying stocks on the Australian Securities Exchange (ASX), there is still further to go, according to Maple-Brown Abbott.
Dougal Maple-Brown, the firm’s head of Australian Value Equities, explained it by the fact that valuations had reached extreme highs and even though they had fallen, there was still some room to go.
“We are currently structuring our portfolios to take advantage of the continuing narrowing in dispersions. We believe our value investing approach will position us to benefit from the emerging opportunities in the current market,” he said.
However, according to Maple-Brown, depending on which measure was used, the highest rated stocks could be more than three standard deviations more expensive at the peak relative to their lowly rated peers, and many sectors were still above their historical levels.
“Furthermore, after spending such a long time so far above average, it would not be surprising if the situation flipped and the highly rated stocks traded below long-term averages for a period of time.
“The wide value dispersion in the Australian market suggest that our value style of investing will continue to deliver for our investors,” he said.
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