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Value: What’s Old Is New Again

Third Quarter 2020 

Today, value is cheap and growth is expensive. But it may not be as extreme as it looks when taking a broader, longer-term view of fundamentals.

Insight from our sub-adviser, Wellington Management
Gregg Thomas
Senior Managing Director, Director of Investment Strategy, Equity Portfolio Manager
Tom Simon
Senior Managing Director Equity Portfolio Manager

 

Today, value is cheap and growth is expensive. But some are reacting differently to value being cheap (again). Some are asking, why bother with value? The argument goes: 1) it hasn’t worked, 2) we don’t see rates rising, 3) chances are low that the economic cycle accelerates above 2019, and 4) we are tired of seeing these charts each year make their way into every macro presentation. We hear increasing skepticism that these valuation charts will somehow predict a different outcome for the future returns to value—or reversion to normality for growth. Einstein said it best as it relates to the definition of insanity: doing the same thing over and over again and expecting a different result.
 
We will touch on six dimensions of this debate:
 
  • Do strategic allocations to value face structural headwinds?
  • Is value broken, or is the definition of value broken?
  • (Re)defining value
  • The changing nature of corporate balance sheets
  • Revisiting growth vs. value
  • Implications

 



Important Risks: Investing involves risk, including the possible loss of principal. • Different investment styles may go in and out favor, which may cause a fund to underperform the broader stock market. 

The views expressed herein are those of Wellington Management, are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. They should not be construed as research or investment advice nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management or Hartford Funds.

 

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