BMO's Green: Three reasons why shunning value funds is dangerous

Inflation, hefty performance gap, widespread style drift

Lauren Mason
clock • 5 min read

The increasing likelihood of an inflationary environment, the hefty performance gap between growth and value stocks and a widespread style drift towards tech names from fund managers means shunning value funds is "a dangerous way to put all of your eggs in one basket," according to BMO GAM's Paul Green.

Green, who is a portfolio manager on the multi-manager team at the firm, said there are numerous signs that both retail and professional investors are "throwing in the towel when it comes to value funds" in the belief that "the only way you can make money is by buying what has worked in the past". LGIM's Onuekwusi: Diversification is the only free lunch investors will get He said: "The S&P 500 Growth and Value indices are showing their largest gap in performance for 25 years, while tech stocks account for 30% of the S&P 500 currently, which is a 20-year high. This even excludes Amazon...

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