Value Investing in Europe: At an inflexion point?

It has been a tough time for value investors since the turn of the millennium. In many global markets, value has been the worst-performing factor, as quality, momentum, and growth traits have driven winning returns.Seemingly undervalued stocks have become cheaper, while companies boasting good quality characteristics, rapid earnings growth, and strong share price momentum have been rewarded with increasingly stretched valuations. This is especially true in the US, where the rise of mega-cap stocks (especially those currently thriving under the collective moniker 'Magnificent 7’) have led the charge. The likes of Apple, Amazon and Tesla have seen their share prices rise over tenfold over the last decade.

But UK and European investors have struggled to find comparable opportunities, often seeking the proverbial needle in a haystack to replicate such gains.However, as with all market cycles, periods of dominance eventually come to an end. Over the long term, value investing has still proven to be one of the most reliable strategies. Research by Two Centuries Investments highlighted the impressive performance of the value factor over nearly two hundred years, where even the largest drawdowns proved to be temporary setbacks in a broader, significant, upward...