Going Global for Value
Global diversification can increase the reliability of outperformance for strategies pursuing higher than market returns.
Global diversification can increase the reliability of outperformance for strategies pursuing higher than market returns because premiums, like the value premium, do not always move in lockstep across markets. Positive outcomes for a premium in one region can offset underperformance in another.
A global perspective on recent relative returns for value stocks emphasizes this point. While value underperformed growth in the US over the past 12 months,1 value outperformed sharply within both developed ex US and emerging markets. Going back five years, including a difficult stretch for the premiums leading into the pandemic, value beat growth in both non-US segments.
While we expect positive value premiums every day, realized returns are uncertain. A globally diversified approach to value may increase the odds of outperforming.
Exhibit 1: Thinking Globally
Annualized value premiums as of September 30, 2023