If you want to see another indication of the extreme nature of the swing to growth in recent years, simply “follow the money”. In 2009, roughly equal amounts were invested in growth and value funds, 39pc and 41pc respectively, with the remaining 20pc in balanced funds that didn’t favour either approach. Today, the equivalent proportions are 17pc value, 57pc growth and 27pc balanced.
The inevitable consequence of that weight of money is that the valuation of growth shares has not been higher relative to value shares in the past 50 years – not even during the technology boom in the late Nineties.
The evidence from the three big market crises of the past 30 years (1987, the tech bubble and the financial crisis) points to value shares doing better than growth as the economy emerges, having done worse during the crisis.
This, together with the extreme divergence between the two styles, argues for value enjoying a return to favour sometime soon. Unfortunately, long and painful waits for their moment in the sun are the lot of the long-suffering value investor. The moments when value is flavour of the month are brief, at times massively profitable, but rare. The rejection of the style over the past ten years confirms that most investors don’t have the stomach for it.
Tom Stevenson is an investment director at Fidelity International and the views are his own.
He tweets at @tomstevenson63