Valuation opportunities
Some say value investing is back. We say it never left.
How does value investing work?
The concept behind value investing is simple: identify stocks whose value isn’t reflected in the current share price and hold on to them until the broader market recognizes what they’re worth.
You see, a stock’s price and its valuation are two different things. Price is determined by what the market is willing to pay, while value is largely driven by what the business behind that stock is worth. If there’s a gap between the two, an investment opportunity may arise.
Valuation-driven investing takes this concept another step further, by taking the future potential of a company into account, in addition to the current business fundamentals. Here, an active approach can shine over the long term.
Keen to learn more? Then explore our educational materials below, which are accredited for structured CPD by CISI.
Frequently asked questions
The concept behind value investing is simple: identify stocks whose value isn’t reflected in the current share price and hold on to them until the broader market recognises what they’re worth.
Valuation-driven investing takes the concept of value investing (holding underappreciated stocks until the broader market recognises their worth) a step further, by taking the future potential of a company into account, in addition to the current business fundamentals.
Growth stocks have driven equity returns across the world ever since the global financial crisis. However, with persistent inflation and rising interest rates (which typically benefit value stocks), the macroeconomic backdrop is changing, which could favour a value approach.
Passive value investments can offer exposure by tracking an index weighted by fundamental value, as opposed to market cap, which is how indices are typically constructed.
Investment risks
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The value of investments and any income will fluctuate. This may partly be the result of exchange rate fluctuations. Investors may not get back the full amount invested.
Important information
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All information is provided as at 3 May 2022, sourced from Invesco unless otherwise stated.
Where individuals or the business have expressed opinions, they are based on current market conditions. They may differ from those of other investment professionals. They are subject to change without notice and are not to be construed as investment advice.
This is marketing material and not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
For the most up to date information on our funds, please refer to the relevant fund and share class-specific Key Information Documents, the Supplementary Information Document, the Annual or Interim Reports and the Prospectus, which are available on our website.
