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https://www.blackrockblog.com/2020/06/23/the-rise-of-the-value-phoenix/

Don't miss the rise of the "value" phoenix

2020-06-23 00:00:00, Jeff Shen, BlackRock Blog

Content Categorization
/Finance/Investing

Word Count:
1437

Words/Sentence:
26

Reading Time:
14.37 min

Reading Quality:
Advanced

Readability:
16th or higher

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The real question is: when will the value rally stick?

For those skeptical that the value phoenix will rise from its ashes, it's important to remember three key tenets to factor investing:

Value represented by the MSCI USA Enhanced Value Index, and momentum by the MSCI USA Momentum Index

[3] Price-to-book ratio is a commonly used financial ratio to determine the value of a company.

Value underperformance: cyclical, not structural

Investors have expressed concern that the value factor is "broken" due to a structural change.

In my experience, in anticipation that the value phoenix may soon rise from the ashes, stalwarts and skeptics alike are beginning to increase allocations to a neutral or even overweight position in value in anticipation of a sustained, cyclical and, for many, long-overdue recovery.

Holly Framsted, CFA, is the Head of US Factor ETFs within BlackRock's ETF and Index Investment Group and is a regular contributor to The Blog.

They highlight P/BV's inability to account for things like brand value and invested R&D, causing it to underestimate a company's worth.

While this critique is certainly valid, and one reason the indexes underlying our iShares value factor ETFs are screened for multiple value fundamentals simultaneously, we don't believe that any single fundamental should be a scapegoat for an entire investment style.

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