This has been a brutal quarter in many ways. The attack on Ukraine is an appalling human tragedy and our hearts go out to all those impacted. Investment losses are secondary and pale in comparison. Nevertheless, it falls to us to examine what has happened over the quarter in investment terms and leave the geopolitics to the politicians.
To explain what has happened to portfolios during Q1 2022, we need to delve into the different types/styles of stocks and provide some insight into where we sit both historically, currently and for the future in terms of our style bias.
For background, below is a brief explanation of the three primary investment styles categorisations used by asset managers today, and how each style affects the construction of an investment portfolio.
An investment style describes the overarching approach taken by the fund manager when assembling a portfolio of assets, and how they’re proposing to meet the fund’s stated investment objectives. Certain asset managers adhere strictly to a particular investment style and will be very clear about the characteristics that they seek in individual assets and the criteria that they should fulfil, to take a place in their portfolio.
We tend to feel that this categorisation is too narrow and investment styles can be divided, and further sub-divided, in a host of different, and often highly esoteric, ways. But for clarity and brevity this article will be restricted to the three most fundamental investment styles: Value, Growth and Quality.
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