Global stock markets have witnessed a strong outperformance favoring growth stocks for a longer period of time, during this period the valuation gap between growth and value stocks has risen unequally. This same development has also affected the market performance in Vietnam. Medium and small cap stocks have been overlooked, and in recent years value focused stock-picking funds have lagged behind the overall index performance – including PYN Elite.
It is not clear how the trend will continue, but it is good to be aware that if one continues to invest in this market situation in line with the cash flow trends of the past, you should at least be alert of the risk of the trend to be reversed. Predicting cash flows is not a part of our fund’s criteria and we only invest in companies, which we recognize fundamentally undervalued in order to outperform long-term index returns.
Below is a chart of MSCI world equities relative performance in value and growth stocks. Value stocks have been underperforming for a record long time. We do not know whether the turn of recent months for the benefit of value stocks could also be predicting a trend reversal.
MSCI: Global Value / Growth Stocks – Relative Performance