Access Investments-European Union- ROMANIA

Investing in “value” companies, those considered to be cheap according to various valuation measures, has historically been more lucrative than investing in “growth” companies, those on higher valuations thanks to their solid earnings potential.  Yet the period since the crisis has bucked the trend.  “Value investing has consistently and considerably outperformed over the last hundred years,” according to Thomas Becket, chief investment officer at Psigma Investment Management. “There have been periods of long underperformance, such as in the 1930s, 1980s and more recently since 2007, but ultimately the results of buying cheap, unloved shares has gone on to be very successful.”  The chart available, showing returns from value and growth companies since 1928, illustrates the point. By driving down the income from safe assets, such as cash and government bonds, the policy has made the shares of those companies that offer dependable returns very attractive.  Mr Becket said these companies have lost the “valuation anchor” provided by income from government debt, and investors have been willing to pay unsustainably high prices for them. In the current climate utilities, telecoms, healthcare and those companies producing consumer staples are considered “defensive”, while companies exposed to the ups and downs of economic growth, such as miners, banks, car manufacturers and airlines, are regarded as “cyclical” and are undervalued by investors.