Relative value is a strategy that has, over the years that we have followed it starting in 2007, generally performed well and has produced returns uncorrelated with other strategies and with the broader market. However in last two years the strategy has started to perform poorly for investors. What is the cause?

The figure below shows is an 18-year chart of the MSCI AC Asia ex-Japan Growth and Value indices. Growth tracked Value very closely over the entire period up to 2017. Since then, Growth has significantly outperformed.

Why is this? (more…)