Pixabay CC0 Public Domain. Jupiter Makes Two New Senior Appointments to its Team
After Jupiter’s appointment of William Lopez, who is leading the firm’s distribution efforts in Latin America and US Offshore, the firm continues to strengthen its distribution capabilities to support its growth in international markets with two key hires. Nick Anderson joins as a Senior Adviser for the Middle East and Africa and Paul van Olst joins as Head of Netherlands.
Nick will be looking at opportunities to further develop Jupiter’s footprint across all sales channels in Middle East and Africa where Jupiter already has relationships with selected third party distribution partners. Nick has over thirty years’ experience in the industry, with a strong reputation in the Middle East and Africa. He was most recently Country Manager and Head of Institutional Client Business for the Middle East & Africa at Blackrock.
Paul, who will be based at the newly-established Jupiter office in Eindhoven, will be responsible for the set up and build out of Jupiter’s business in the Netherlands. Paul joins from Fidelity International where he worked for 15 years in various sales management roles in the Netherlands and Benelux, most recently as Head of Distribution, Netherlands. Prior to this, Paul worked for over ten years at Zurich Financial Services in the Netherlands.
Nick Ring, Global Head of Distribution, commented: “We are very pleased to have attracted three experienced and highly-respected individuals to spearhead our business drive in their respective regions. Our strategic priority has been to expand our international business in a considered way and where we find the right people to communicate Jupiter’s investment expertise to potential investors. The appointments of Nick, William and Paul are a natural next step to broaden and deepen our global growth story.”
Since the start of July, EMD assets have bounced with local and dollar debt markets up. According to Investec Asset Management, the positive returns reflect the still solid fundamentals across most of EM and the extent of the sell-off in Q2 reinvigorating value into the asset class. However, Turkey has been the noticeable exception – it is the only country to have a material negative return.
Grant Webster, Portfolio Manager, Emerging Market Fixed Income at Investec believes that “the drivers of recent weakness have been the same drivers that have weighed on the country’s markets over the medium term; namely a lack of credibility at the central bank, an unwillingness or inability to address external vulnerabilities and, related to both these points, a troubling political backdrop of heterodox macro policy and increasing authoritarianism.”
For Webster, both domestic and foreign politics are headwinds for investors. Relations with the US have also worsened, which speaks to the ongoing deterioration in relations with the West, and “since Erdogan’s election victory in June, there have been several moves that have rattled investors including, changing the rules to make the central bank governor a political appointee. Moreover, the appointment of his son-in-law (and potential successor), Berat to head up the finance and treasury ministry.”
He also mentions how the July meeting of the central bank disappointed markets after, and despite both core and headline inflation surprising more than a full percentage point higher, rates were kept on hold and the forward-looking guidance was left unchanged – “the optics couldn’t have been much worse given the fresh concerns about the politicization of the central bank,” he states. Webster also notes that the current account deficit remains above 5% and that net foreign-exchange reserves keep on dropping, while the currency’s weakness is exerting major pressure on corporate balance sheets.
According to Webster, Turkey is now in very challenging waters but there are some measures it can take to navigate the risk. “The major supporting factor for Turkey is that the government has relatively low levels of debt. Even under our severe scenario analysis debt levels remain manageable. However, if the government is going to take advantage of this supportive starting point, then at the very least we think they need to”:
Hike rates by around 500-700bps to take rates to 23-25%
Tighten fiscal policy including by increasing fuel and energy prices
Act to prevent more damaging US sanctions by re-engaging with the West at the highest level
Put in place plans to establish a “bad bank” which could take on non-performing loans from the banking sector in return for capital injections
“Taken together this would stem local demand for dollars, curb inflation expectations, reaffirm fiscal prudence and bolster investor confidence. However, what Turkey needs, and what the government does, are separate questions. If the government delays and the situation continues to deteriorate, we believe the government may need to source around $50bn to finance a bank bailout, as well as increase FX reserves”. As they see it there are perhaps three possible scenarios for how they may try to achieve this.
Seek IMF and Western support- The best outcome is also the least likely: a return to orthodoxy.
Seek support elsewhere: China, Russia and Qatar are potential sources of funding- Given his seeming antipathy towards the West, Erdogan might turn eastwards:
Local ‘solution’- A materially worse outcome than either would be something more akin to autarky
“Turkey is between a rock and hard place. The authorities have some tough decisions to make, but seem unwilling to recognise the scope of the fragilities or take sufficient steps to address them. Ultimately, the market will impose a reckoning. At some point the value that has opened up might start to look like an attractive entry point, but much will depend on the choices made by the authorities. For now, we remain relatively conservatively positioned across portfolios, preferring opportunities elsewhere in our universe where we see better fundamentals and more constructive policy-making.” Webster concludes.
Pixabay CC0 Public DomainPhoto: xxoktayxx. Turkey’s Crisis: Policy Response Disappointing So Far
Turkey is in the midst of an economic crisis. On August 10th their assets suffered greatly and their currency has fallen to historical lows after President Trump said last week he was doubling the amount of steel and aluminum tariffs on the country. On Wednesday, Tayyip Erdogan doubled import tariffs on some US imports (cars, alcohol, tobacco, cosmetics) and a Turkish court rejected an appeal for the release of a jailed American pastor at the center of the spat between Ankara and Washington.
The Turkish economy remains vulnerable as its current account deficit is the widest among emerging markets (The United States had a trade surplus with Turkey in 2017 of nearly 330 million dollars) and inflation levels are nearly three times the central bank’s target. Aneeka Gupta, analyst at WisdomTree mentions: “The perception from the investment community is that monetary policy in Turkey is not independent as President Erdogan is opposed to higher interest rates, so the central banks would need to defy the president and raise rates to defend the currency and avoid a default scenario.”
According to Delphine Arrighi, fund manager, Old Mutual Emerging Market Debt Fund, Old Mutual Global Investors, the worsening of political tensions between the US and Turkey has been the final blow to an already dire economic situation, with the collapse of the lira now rapidly fuelling concern of a full-blown currency and debt crisis given the amount of USD-denominated debt in the private sector. More over, the meetings between the banking regulator and the central bank over the weekend haven’t yielded the results the market was expecting. “Although the recent measures announced by the Central Bank of the Republic of Turkey (CBRT) will aim to ease onshore liquidity, they will fall short of restoring investors’ confidence. At this stage, the lack of credible policy response is pushing Turkish asset prices into a tailspin” Arrighi mentions adding that “given the reluctance of the CBRT to hike rates at its previous meeting and President Erdogan’s recent comments blaming an international conspiracy rather than acknowledging the real economic crisis resulting from an overheating economy faced with tighter global financial conditions, there is little hope for a return to orthodox policies at this stage”.
Arrighi suggests to include capital controls, “which seem more likely than an appeal to the IMF, but that would certainly not be the least painful and would most likely precipitate a recession while postponing the return of portfolio inflows. Hence a sizable rate hike followed by drastic measures of fiscal consolidation still appear as the most viable option to re-anchor the lira and pull the Turkish economy from the brink. This is very much like what Argentina had to deliver. We doubt the political will is there in Turkey and so more pain might be needed to force policy action. Some resolution of the political spat with the US could lead to some near-term relief in the currency, but this is unlikely to be sustainable if not accompanied by credible economic actions.”
Ranko Berich from Monex Europe mentions that “Normally when a currency falls 10% in a day, political and monetary authorities scramble to promise fiscal discipline and central bank independence. Instead of doing this, Erdogan has reached for the crazy stick and given the lira another whack in a rambling speech that focussed more on combative rhetoric than addressing market concerns… The lira’s issue now isn’t if the central bank is willing to raise rates high enough to combat the coming inflationary shock, but one of credibility. Erdogan’s son in law and economy chief, Berat Albayrak, also gave a speech in which he spoke in favour of central bank independence, so this may represent a sliver of hope for the lira. But the pressure is now on the TCMB to announce a drastic tightening of monetary policy in the order of a 5-10% increase in rates to demonstrate that it has the political mandate to fight inflation and stem the lira’s losses.”
Dave Lafferty, Chief Market strategist at Natixis Investment Managers, adds that: “This risk to EM contagion is sentiment, not fundamental. Turkey has limited trade and economic ties to other EMs. However, market reaction can throw the baby out with the bathwater as we see with other fragile EMs like Argentina and Hungary, who both saw steep currency losses in sympathy with the lira. Argentine CDS also spiked although Hungary CDS held reasonably steady.”
. International Wealth Protection Clarifies and Validates the Tax Benefits of Private Placement Life Insurance in Peru
The utilization of Private Placement Life Insurance has been considered as a planning strategy for wealthy Peruvian families as a result of the enactment of Peru’s Controlled Foreign Company (CFC) Rules Regime December 31st, 2013.
Since then, most of the highly reputable Peruvian law firms agree that Private Placement Life Insurance should be considered as a planning strategy for wealthy Peruvian families and have been seeking the advice of International Wealth Protection. After attending multiple tax planning meetings with Peruvian clients and their tax advisor where Private Placement Life Insurance was a major point of discussion, most concluded with a sense of ambiguity on the subject since this norm left one unanswered question that was the premise of the many disclaimer pages that accompanied every legal opinion issued by the most renowned attorneys: “Will the Peruvian tax authority, SUNAT (Superentendencia Nacional de Administracion Tributaria) back the law as outlined by the Peruvian Superintendent of Banks and Insurance (SBS)”?
Knowing the unparalleled benefits of Private Placement Life Insurance which make it a viable and sustainable solution proven to be effective in highly regulated and taxed jurisdictions as are the USA and Europe, International Wealth Protected decided to walk the talk and truly put the client interests first and take the appropriate steps to validate its legal recognition directly from the SUNAT knowing that anything other than a fully favorable response would obliterate the offering as we knew. We debated the strategy with opponents, but in the end decided to proceed in the best interest of the Peruvian client and the integrity of the insurance industry in the long term. The consultations made to the SUNAT were based on the tax implications for life insurance policies issued by foreign insurance carriers regarding the insurance proceeds paid to Peruvian residents and the partial withdrawals to the policy executed by the policy holder.
On July 2, 2018, one year after the original consultation was made by International Wealth Protection with the support of EY Peru and the Lima Chamber of Commerce, the SUNAT finally issued a response to every question made, citing specific laws with a favorable conclusion.
The SUNAT confirmed that regardless of the issuing jurisdiction of the insurance carrier, the death benefit paid to any natural Peruvian resident is not subject to Peruvian Income Tax. As relates to partial withdrawals on a life insurance policy issued by a foreign insurer, the SUNAT confirmed that Peruvian Income Tax will be applicable to the capital gains appreciated within said withdrawal. If there are no partial withdrawals from the Insurance Policy, the accumulated gains and returns will be completely under the tax deferment regime.
While many Private Placement Life Insurance representatives are popping the champagne and utilizing the response to our inquiry (which they strongly opposed), International Wealth Protection remains cautious when collaborating with the client’s most trusted advisors.
We advise and recommend the following to those considering the implementation of Private Placement Life Insurance for Peru’s most wealthy residents. Please make sure to involve an expert with the ability to:
• Respect the two main elements that allow the product to pass the “substance over form” test which are Investor Control and Risk Shift • Practice objectivity by representing several providers and proposing 2 to 3 product alternatives to the client • Transmit full understanding of the solution including cross border implications and not a specific product • Implement tailor made products given the unique characteristics of a wealthy client • Understand this is a niche product designed for the ultra-rich and is not a retail offering • Provide design flexibility, institutional pricing, and immediate revocability without surrender charges.
The inability to provide these critical factors is inconsistent with industry standards and can inject vulnerability into the transaction.
Honoring that “doing what is right is always the right thing”, I am pleased by the outcome of our endeavor and extremely happy to share this great accomplishment with those that can benefit from it.
For your information, the response is now published on the SUNAT website.
Column by Mary Oliva, President- International Wealth Protection
Earnings seasons can be volatile. Stock traders love it as an opportunity to position for an earnings beat. And when companies report an unexpectedly terrible miss, it can leave many investors holding the bag. This is what happened to an unsuspecting market on Wednesday when Facebook unexpectedly reported an earnings miss, and lowered guidance. The stock plunged nearly 19% on the day, and dragged growth fund managers disproportionately down with it (see chart below for the Facebook and total Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Google (GOOGL) exposure).
Facebook is a prominent growth stock, widely held across active managers. Many investors turn to the growth category of the style box to help harness market trends, participate in positive investor sentiment, and seek financially stronger companies…those worth paying more for. A factor lens can help determine which stocks are worthy of a higher premium.
Momentum strategies track price trends, a measure of investor sentiment. Many breakout stocks across a variety of industries have earned exceptional returns over the last 6 to 12 months–the time frame generally employed by momentum strategies like the iShares Edge MSCI USA Momentum ETF (MTUM). Investors have seemingly been more skeptical of Facebook’s forward-looking prospects post privacy scandal, and while the stock earned positive returns in the first half of the year it lagged many of the truly breakout names that dominated market returns in 2018. As a result, MTUM[2] has no exposure to the stock.
For investors looking for exposure based on financial strength, or quality, factor strategies may screen on popular metrics like Return on Equity (ROE), Earnings Consistency, and leverage. Once again, even though it has low amounts of debt, Facebook doesn’t hit the mark relative to its peers in terms of consistency of earnings and ROE, and the iShares Edge MSCI USA Quality ETF (QUAL) has no holdings in FB as a result. Factor investing takes a view towards the long-game in investing.
Momentum price trends play out over months, not days or weeks. And the strength of a company’s balance sheet is proven out over years, not one earnings report. Nevertheless, earnings season provides an opportunity for investors to take stock. It provides another data point around the consistency or inconsistency of a company’s ability to deliver earnings to its shareholders. It provides another look at investor sentiment in a stock, and a company’s forward-looking prospects. A factor lens can help to cut through the noise to find those stocks deserving of your confidence.
For a complete list of holdings for the iShares Edge MSCI USA Momentum Factor ETF click here.
For a complete list of holdings for the iShares Edge MSCI USA Quality Factor ETF click here.
Build on insight by BlackRock, written by Martin Small, Head of U.S. iShares.
Wikimedia CommonsAsset TV . Asset TV Announces “The ETF Show,” Sponsored by the NYSE
Asset TV, a global online video platform for investment professionals, proudly announces the launch of “The ETF Show” sponsored by the New York Stock Exchange (NYSE). The ETF Show includes coverage of new ETF launches, interviews with issuers and strategists, and investor education. With 5 episodes so far The ETF Show has already become the most watched program ever by Asset TV’s over 240,000 registered viewers. The NYSE will sponsor The ETF Show to further promote investor education about ETFs.
“We are thrilled to launch The ETF Show, the first weekly program about ETFs delivered from the NYSE trading floor. ETFs offer investors exposure to a diverse range of assets and are currently one of the fastest growing investment products in the world,” said Neil Jeffery, Asset TV EVP – Head of Americas. “The launch of The ETF Show demonstrates the growing importance of these investment vehicles, and Asset TV’s and the NYSE’s commitment to advancing education on ETFs.”
The NYSE is the world’s leading exchange for ETFs, with $2.8 trillion in assets under management (AUM) representing 83 percent of U.S. AUM and 22 percent of U.S. ETF trading volume in 2017.
To watch weekly episodes of The ETF Show follow this link.
CC-BY-SA-2.0, FlickrMasja Zandbergen, Head of Sustainability Investment and Integration of ESG criteria at Robeco / Courtesy Photo. According to Robeco, Sustainable Investment Gains Sense Within a Context of Erratic Returns
In 1999, Robeco launched the Robeco Sustainable Equity Fund, one of the first sustainable funds in the market. Since then, and almost 20 years later, the asset management company continues to insist that we are not facing a trend, but rather a new way of understanding investments and the environment. “The time has come to take advantage of the wave of popularity of sustainable investment to make a real change in the way we invest,” says Masja Zandbergen, Head of Sustainability Investment and Integration of ESG criteria at Robeco.
For Zandbergen, sustainable investment is a response to the reality surrounding us, which explains the success it’s having among investors. “There are certain megatrends which justify the weight gain of sustainable investment. Climate change, increasing inequality, and cyber security are three clear trends. To these we must add the great change suffered by consumer behavior, something that is also transferred to finance. Investors not only want profitability, but to be responsible with their current environment and with that of future generations”, she points out.
In this regard, Zandbergen argues that just as there has been a change in the investor, there has also been a change in the way in which this type of investment is approached: “Whereas previously investment was sought in certain activities and when a company did not act in a sustainable manner, investors tended to sell those assets, the current approach is to help companies to meet their challenges in terms of ESG criteria, something that investors also value more because they consider that it has a greater impact and greater capacity for change,” she says.
Evidence of how sustainable investment has changed is the evolution of the common investment strategies. “Exclusion continues to be the most common strategy, but the strategies that grow most among investors are those of integration of ESG criteria in impact analysis and investment, proof of which is the popularity of the thematic funds,” explains Zandbergen. In fact, these grew by 13.3% and 20.5% between 2014 and 2016, according to Robeco’s global data.
The management company argues for a comprehensive vision of sustainable investment because it provides valuable data to the non-financial analysis they carry out. “We looked at the ESG fundamentals and criteria and, in 35% of cases, we found that these had a significant impact on the financial analysis. In an erratic world of profitability, I believe that sustainable investments have earned their place,” she concludes.
Another trend observed by Zandbergen regarding sustainable investment is that there is increasing evidence that ESG criteria are an engine that drives the good behavior and profitability of an asset. In her opinion, “it’s clear that sustainability is a factor that influences the valuation of an asset simply because of the risks it avoids”. One further step would be, according to her criteria, that you could come to consider a factor when investing. “We are still far from something like that, but there is growing evidence of the fact that, in the long term, these criteria add value,” she insists.
Wikimedia Commons. Bordier & Cie Acquires Majority Stake in Helvetia Advisors
Bordier & Cie announced the acquisition of a majority stake in Helvetia Advisors, based in Montevideo Uruguay, an investment advisor regulated by the Central Bank of Uruguay, which was founded by its current shareholders in 2010. Helvetia Advisors provides investment advice to private clients in the Southern Cone region. The team consists of 3 senior bankers plus support staff with extensive experience in wealth management.
Grégoire Bordier, Senior Partner of Bordier & Cie says: “We have been present in Uruguay for many years and this acquisition confirms our commitment to the region and our interest to grow in Latin America’s Southern Cone, a region with great potential in terms of wealth management business”.
Daia Feigenwinter, Head Latam & Iberia at Bordier & Cie: “We are excited to welcome Helvetia Advisors’ team and their clients to Bordier & Cie and look forward to serving and growing our client franchise together. We consider it of strategic importance being physically close to our client base while offering an independent open architecture product platform through multiple digital channels. With almost 175 years of experience in wealth management, we are certain Helvetia Advisors’ clients will greatly benefit from our global expertise.”
Bordier & Cie is an independent, international private bank established in 1844 as an unlimited liability partnership. It is owned and managed by the fifth generation of its founders. Bordier & Cie has offices in Singapore, London, Paris, Geneva and Zurich among others and has been present in Montevideo, Uruguay since 2007.
Photo: Jean Jacques Barberis. From Mexico and Chile, Amundi Sees a World of Opportunities in Latin America
Amundi, the only European asset management company in the top 10 worldwide, with almost 1.5 trillion Euros in assets under management, is seeing a world of opportunities in Latin America. While it is the fifth most important for the firm after Europe, Asia, the US and the Middle East, with the acquisition of Pioneer, and taking advantage of its local presence in both Mexico and Chile, Amundi plans to grow within this region.
According to Jean Jacques Barberis, Head of Institutional Clients’ Coverage for Amundi AM, the global asset management industry will continue its consolidation, “we believe it will be divided between huge firms and boutiques, so that among the largest there will be only 5-6 mega managers, most of them from the US, and Amundi… We present an alternative to US managers.” He believes that being able to generate custom passive products, and that all its strategies have an ESG filter are two of its strong points.
“Although ESG investment is just beginning in emerging markets, it’s experiencing very significant growth. Socially responsible investments start with a theme of securities, followed by one of risk, and finally they are expected to provide better returns,” he mentions, adding that at Amundi, they recently launched the largest green bond fund in history with 1.5 billion Euros, which “reflects the world’s appetite for this type of investment.”
According to Barberis, “the green bond is the perfect asset class so that money from developed countries flows to emerging countries, which is why an important growth in issuance is expected”. However, he considers that the greatest risk lies in investing resources too quickly since “the worst thing that could happen is to lose the investor’s confidence in the quality of the bonds”.
Opening the investment range for Afores
At present, Amundi already has investment mandates in operation with Afore XXI Banorte, Afore Citibanamex and Afore SURA, but is looking to offer other alternatives. On access to mutual funds, Gustavo Lozano, Head of Amundi Mexico, mentions that this will make Afores question whether to use active or passive strategies for their tactical decisions and complement their diversification through active management in a more tactical way, especially those that already have mandates. While for those Afores which as yet have not initiated mandates, it opens a window of access to international diversification.
Something of importance worth mentioning is that in Amundi’s case, regardless of the type of strategy that the client chooses, the firm is willing to join the Afore in providing the support they require “regardless of whether it’s active or not; once there is a relationship, Knowledge Transfer capabilities are included,” Lozano points out.
Recently, Amafore authorized some Amundi ETFs, including a Low Carbon ETF that the firm plans to continue broadening their offer to the Mexican investor. According to Lozano, “When your investment is long-term, as in the case of Afores, ESG investments make more sense.”
For Barberis, however, “one of the challenges is the current regulatory framework,” which is why the firm is actively working with Amafore, CONSAR, CNBV and the Treasury to resolve the concerns of the regulators and help them lay the foundations, so that they can help the industry develop.
The theory behind the value investing style is very straightforward. You buy stocks that are undervalued and then hold them until the market recognizes the inherent value and bids the share higher. Many of the most famous investors of all-time are known for their adherence to the value investing style. This group includes the likes of Benjamin Graham, John Templeton, Bill Miller, and of course, Warren Buffett. An extra twist to this method, as practiced by famed value investor Mario Gabelli, is to buy value stocks that have a catalyst. Gabelli and his team of analysts look for undervalued companies that have an upcoming potential event that will get the market to notice them.
Historically, value has outperformed growth, vindicating the chosen investment style of the aforementioned titans of finance. However, the last 11 years have been quite a different story as growth has far outpaced value.
What are the reasons for value’s long streak of underperformance?
Well, if we look back at the last decade, we can start with the Great Recession and the Federal Reserve’s actions during the recovery. First, the Fed lowered rates to near zero which effectively neutered one of the tenants of value investing: choose companies with a strong balance sheet. With companies able to raise debt at historically low rates, those that chose not to lever their balance sheets were penalized by investors. Companies that did lever up with cheap debt were able to invest in growth opportunities, both through organic expansion and acquisitions. The same thing can be said for investing in companies with a solid cash flow profile. Historically, value investors flocked to companies with a steady stream of cash flows, but again this attribute became diminished in the eyes of the market.
The second problem was the Fed’s quantitative easing (i.e. flooding the market with cash), which caused investors to be much less discerning with their money. During the last decade, a lot of money has been chasing a finite number of investments, causing investors to stop worrying over valuation. If you don’t believe me, take a look at the valuation of a high flyer like Tesla or Netflix.
So maybe the problem is we’ve had a really long interest rate cycle?
Possibly, and both of the aforementioned problems are winding down as the Fed is raising rates and is no longer growing its balance sheet. Let’s not forget to mention that since 1928, value has outperformed growth every time rates have risen.
Related to the extended interest rate cycle is that financials has been the worst performing sector over the last decade, and unfortunately for value investors it is the sector with the largest weighting in value indices. Look at the top holdings of any large cap value fund and you will see some combination of JP Morgan, Wells Fargo, Citibank, and Bank of America. The third largest sector in most value indices is energy, and until recently, it had performed poorly for years. Financials and energy combine for a stunning 43% of the Russell 1000 Value Index. Technology, on the other hand, only accounts for 9% of the value index, but it is a third of the growth index.
Has value investing relinquished its throne or do we perhaps need to re-evaluate how we define it?
In 1992, Nobel Laureate Eugene Fama, who is commonly known as the ‘father of modern finance,’ and fellow professor Kenneth French created the Three-Factor Model which predicts that value stocks outperform growth stocks.
One of the key ratios used by Fama and French to discriminate between value and growth stocks is the Price-to-Book ratio (P/B). In this ratio, ‘price’ is simply the market value of the company, while ‘book’ is the assets minus liabilities. A low P/B ratio has historically been treated as an indicator of an undervalued company, but is that still true? The methodology used to select the constituents of the Russell 1000 Value Index is heavily weighted towards low P/B ratios. This is why the index is stuffed with financial companies and why it also overweighs old economy industrial companies that own many physical assets. Conversely, technology companies mostly get ignored, as they typically do not have many assets. A great example of this problem is Apple. The maker of the iPhone appears to be a value stock based on profitability, cash flow and balance sheet, among other metrics, but because of its relatively high P/B, it falls into the growth index. Warren Buffett would seem to agree that Apple is a value stock since he recently made it the largest holding at Berkshire Hathaway.
Perhaps value hasn’t really underperformed as badly as we had thought. Maybe we need to evolve our understanding of value investing just as Warren Buffett has.
