Sorry GARP your time is up

n US ,value strategies outperfomed growth in 2016 and so has it in India. The Last one year return of bse 200 is almost 20% and Indian fund managers who have value style beat growth style handsomely . Consider this , the return of an actively managed value strategy mutual fund was almost 30% and a pure growth strategy around 20%. so this is a variation of almost 10% in return of diversified mutual funds over last 1 year.

The golden period of value style fund manager was from 2002-2006. However since 2007 they have heavily underperfomed GARP (good and clean balancesheets) strategy every  year except 2012 and 2016.

This article from Gavekal makes a simple point. if the current inflation alarm seems to be a hoax then US bond yield will be headed down and lower inflation means buy growth strategy. if inflation is for real then buy stressed balancesheets and bet on managers are generally stock pickers and most dont give too much importance to macro enviroment. But what good is buying a company with clean balancesheet in a macro enviroment  which favours value ?

Coho Capital 2Q20 Commentary: Podcasts, The New Talk Radio

Coho Capital LogoCoho Capital commentary for the second quarter ended June 30, 2020. Q2 2020 hedge fund letters, conferences and more Dear Partners, Coho Capital returned 46.6% during the first half of the year compared to a loss of 3.1% in the S&P 500. Many of our holdings, such as Netflix, Amazon, and Spotify, were perceived beneficiaries Read More

I think US interest rates are headed lower in next couple of months , but over next couple of years inflation and higher rates are baked into our future so bet on value …… sorry GARP your time is up