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Aussie investors spurn value: Charts of the week

Lewis Jackson  |  28 Jun 2021Text size  Decrease  Increase  |  
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This week I look at whether improving performance for value stocks has enticed investors back into the sector. For all the hype about the rotation to value, the data suggests investors are yet to be convinced.

Even as the long-awaited value turnaround was underway, Morningstar data shows investors continued to pull money out of value tilted funds.

In the twelve months leadind to 31 March 2021, large cap growth funds received $1.65 billion in flows while their value equivalents bled out $4.5 billion.

This was despite a rally in value stocks. Between September 2020 and March 2021, the Russell 1000 Value index more than tripled the return of its growth equivalent, as investors bet on economic recovery and inflation fears hit growth names.

Asset flows - Large cap global growth and value funds (April 1 2020 – March 31 2021)

Asset flows - Large cap global growth and value funds (April 1 2020 – March 31 2021)

Source: Morningstar Direct. Retail and wholesale flows combined.

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Aussie investors were unperturbed. Money flowed into large cap global growth oriented funds in every month except April and July 2020.

Despite losing roughly $2 billion in those two months, the category still added a net $600 million over the full twelve months.

The opposite was true for value funds, which had only one month of positive flows and ended the period with net withdrawals of $1.3 billion.

Value funds such Schroder Global Value (15210) lost 31 per cent of net assets over the 12 months, while the growth-oriented T. Rowe Price Global Equity Fund (14479) nearly doubled net assets, going from $2.9 billion to $5.1 billion.

It’s a similar story with domestically oriented funds. Investors added $1 billion to local large cap growth funds while their value equivalents lost more than three times that sum, saying goodbye to $3.2 billion.

Asset flows - Large cap Australian growth and value funds (April 1 2020 – March 31 2021)

Asset flows - Large cap Australian growth and value funds (April 1 2020 – March 31 2021)

Source: Morningstar Direct. Retail and wholesale flows combined.

(Click to enlarge)

Nearly half of that was lost during the value rally. In the 6 months to March 2021, Australian investors pulled out $1.3 billion.

The popular value oriented fund, Investors Mutual Australian Shares (5339), had outflows every month except May, where it recorded a modest inflow of just over $700,000.

This stands against the $517 million investors pulled from the fund over the period.

With value having underperformed growth in US equity markets for the past ten years, it looks like value managers will need an extended period of performance to coax investors back.


is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

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