What loomed towards the end of the last calendar year has now happened. The factors value, quality and momentum developed positively in 2021 without exception. Momentum gained the most in a continuously rising market (MSCI World TR Net +25.6% in CHF). The much-criticised value factor started its comeback and left quality stocks behind; at the same time, both factors were able to beat the broad market. Therefore, it is not surprising that our global multi-factor approach has delivered the best annual result since 2013.
And how did the three factors start 2022?
Value favoured by investors
Although we are only a few months into the current year, it has already brought several eventful weeks. For example, the US Federal Reserve caused a stir at the beginning of the year with the announcement that it may wish to dampen the expansive monetary policy in March with the first interest rate hikes. This has meanwhile occurred. Against this backdrop, growth stocks had a particularly difficult time, and the rotation towards value once again picked up significantly. With the outbreak of war in Ukraine and the associated rise in the oil price, the plans of the Fed are seen in a critical light. New, short-term liquidity injections and more reluctance to raise key interest rates are viable alternatives to support the economy. The strength of the value factor premium, on the other hand, does not deflect from this. Low-valued securities remain relatively sought-after in this correction phase and confirm the trend reversal that began last year. This may be due, among other things, to the unchanged expectations of a long-term normalisation of the global economy. Experience has shown that value pearls shine more brightly in the face of a more restrictive monetary and fiscal policy. What's more, the race for the value premium to catch up is far from over, as the following chart shows.