7
November
2011
There has been some ongoing debate recently about value vs growth investing strategies and which is more risky.
We believe that investors are compensated with higher expected returns for bearing higher investment risk.
Research from leading financial economists has identified two risk factors that the market rewards investors for bearing –size (meaning smaller companies are more risky than large companies) and value meaning that value stocks are more risky than growth stocks. The international evidence over the long-term seems to support this conclusion.
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The historic data internationally consistently suggests that the volatility of value strategies is consistently higher than that of growth strategies.
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