In the years since the financial crisis, the value factor has seen mixed results—until 2016, that is. Value did particularly well last year, and all signs point to continued success this year.

Rotation toward value factor

In a research note dated Jan. 5, Morgan Stanley equity strategist Charles Clavel and team noted the strong rebound in the value factor throughout much of 2016, naming it “Factor of the Year” for 2016. They said value did well across geographic regions, which they believe could mean that it will continue to do well this year, especially in Japan.

They reported that December capped a year of strength for value investing, which confirms a global rotation toward the value factor which began early last year. Further, value became even stronger after Brexit. Clavel and team added that outside of Japan, value’s outperformance of growth was very high compared to historical standards.

Value factor to keep outperforming


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