Key points:

• Since the Global Financial Crisis (GFC), growth stocks have outperformed value stocks significantly. This follows a long period of outperformance for value.
• Whilst the “tech bubble” made some investors weary of technology and growth companies, valuation levels for tech companies today are significantly lower than 20 years ago. Further, investors should look at the earnings certainty of industry incumbents through that same critical lens.
• We believe there is a strong argument that the structural tailwinds which have assisted growth stock investing will continue.

Proponents of global value investing have endured a torrid time following the GFC with value underperforming growth eight out of the past ten calendar years. At the time of writing, value had underperformed growth by over 87% since relative outperformance peaked in 2007. Underperformance of this magnitude is uncommon, but not unprecedented, with the decade prior to the technology bubble being a golden period for growth investing, only to reverse sharply in the years that followed.

This leaves us at an interesting juncture. Does growth investing continue its outperformance? Or does the value premium return to reign again?