In focus
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Manager Alastair Mundy’s value style has been out of favour for some
time – but he says the reasons for this are cyclical, not structural
Temple Bar
FE TRUSTNET
has been one of the most challenging
periods for value managers in his
career, he pointed out “there are two
sides to every coin”.
“All value investors will feel rather
beaten up at the moment, but at the
same time rather excited about their
opportunities,” Mundy finished.
FACT BOX
MANAGER: Alastair Mundy / LAUNCHED: 24/06/1926 / DISCOUNT/PREMIUM: -6.2% / OCF:
0.47%
FE CROWN RATING
PERFORMANCE OF TRUST
VS SECTOR AND INDEX UNDER MANAGER
IT UK Equity
Income (307.16%)
Temple Bar Investment
Trust (391.25%)
FTSE All Share
(301.25%)
500%
400%
300%
200%
100%
0%
5
ct
-100%
“If you look at the yield curve,
investors have regrettably given up
on inflation ever moving higher in a
significant way again, which we think is
a little bit backward-looking,” he added.
“Perhaps people aren’t necessarily
focusing on why that has been cyclical
rather than structural and, therefore,
we wonder if investors have got a
portfolio which is future-proof, or
whether it’s actually history-proof.”
Mundy said that even if the reasons
for value stocks being aggressively
sold down are correct, he would argue
“there are some babies that have been
thrown out with the bathwater”.
He added that both value and
growth have had their “periods in the
sun” over the years and when either of
them is doing well, that performance
tends to get extrapolated.
“Unfortunately, that often means
that when investors fall in love with
A
lthough Alastair Mundy’s
value approach to investing
has been out of favour for
much of the post-global financial
crisis period, his Temple Bar
Investment Trust has still been able
to comfortably outperform its peers
over this time. However, the manager
warns it will take something drastic
for his style to become “sexy” again.
“For value to do particularly well,
you really have to believe that the
yield curve is going to change shape
significantly and bond yields are
going to rise,” he explained.
While the recent inversion of the
yield curve has raised fears of a
recession, Mundy said there are
several developments that could be
positive for value stocks – for example
increased government expenditure
and growing tolerance of inflation
could help push yields higher.
any sort of investment style, they
seem to take their eye off the ball in
terms of the valuations they’ll pay.”
The manager added that there
has been even less emphasis on
valuations recently, which can
often lead to “sub-optimal decision-
making”. And although he said this
Source: FE Analytics
trustnet.com