HEAD-TO-HEAD: JP Morgan versus Neuberger Berman

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Introduction

“Value investing” has been unfashionable since the 2008 global financial crisis; its flagging popularity has perhaps even induced doubts among the most ardent followers of its founder Benjamin Graham and his most famous acolyte, Warren Buffet.

The decade-long US equity bull market was led by glamorous and (arguably expensive) technology growth stocks, while staid “value stocks”, representing solid, well-run businesses with healthy balance sheets, shuffled behind.

For instance, the Russell 1000 Growth index generated 312% between 1 January 2010 and 1 January 2020, compared with 205% by the Russell 1000 Value index, according to FE Fundinfo data.

Yet, caution, fear and the end of the bull market this year in the wake of the Covid-19 pandemic has done little to convert growth-cult members to the virtuous process of identifying stocks trading below “fair value”.

In fact, quite the opposite. The Russell 1000 Growth index is up 15.3% so far this year, while the Russell 1000 Value index is down 17.3%.

However, although sentiment for new technology stocks has been reinvigorated by predictions of an acceleration of online and virtual trends in a post-lockdown world, there is still a place for value investing, according to Isaac Poole, chief investment officer at Oreana Financial Services

FSA asked Poole to compare two US equity funds with value tilts: the JP Morgan US Value Fund and the Neuberger Berman US Multi Cap Opportunities Fund.

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