Growth and Value Investing: A Complementary Approach

Growth and value investing are often seen as competing styles, with one outperforming or underperforming the other during different periods of time and market cycles. While the approaches may differ, Stephen Dover, head of equities at Franklin Templeton Investments, and Norm Boersma, chief investment officer of Templeton Global Equity Group, say growth versus value doesn’t have to be an either-or proposition. The pair outline the differences between a growth and value-driven investment approach, and why they can be complementary strategies. They also discuss recent market volatility and why they think the spotlight may be back on value.

Here are some highlights of the views of speakers represented in the podcast:

    • Stephen Dover: Value managers are usually looking for a reversion to a mean that something is undervalued at this point and it’s going to come back. Value managers are often called contrarian managers because they’re looking at what everybody else does and they do the opposite.
    • Norm Boersma: Volatility in markets is normal. We started to think after a few years of very, very low volatility that that’s a more normal situation, but it actually isn’t. We look at volatility as an opportunity in a lot of cases. We’re looking for mispriced stocks, and if there’s not a lot of volatility, you don’t get a whole lot of mispricing.
    • Stephen Dover: Historically, value can underperform for a very long period of time and then very rapidly catch up and the greater the dispersion between the growth and the value styles, the greater the likelihood that that change will happen fairly quickly.