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Longstanding Value Premium Is Currently Dormant
- Value stocks (cheap price-to-book) historically outperformed growth by ~3.5% annually in the U.S. from 1928–2017.
- That premium has vanished recently as growth dominated seven of the last ten years, driven by big tech multiple expansion.
Regional Factor Performance Can Diverge Sharply
- Geographic diversification matters: Canadian value outperformed U.S. value by about 5.5% annually over the last ten years.
- A single-market narrative (U.S. growth) misses regional factor differences that affect portfolios.
Rebalance Regularly Across Factors
- Rebalance fixed allocations across factors to sell high and buy low automatically.
- Regular rebalancing increases expected returns and lowers portfolio volatility over time.