Global Value Investing: Why It Still Works—If Done Right
In a financial world shaped by hype, tech rallies , and shifting economic paradigms , the age-old question resurfaces: Does value investing still work? According to Cliff Asness—founder and Chief Investment Officer of AQR Capital Management—the answer is a resounding yes ✅. But, as he passionately explains on ️The Long View podcast hosted by Christine Benz and Dan Lefkovitz of Morningstar, value investing only works if it’s done right .
What Is Value Investing—Really?
At its core, value investing means paying a low price relative to a company’s fundamentals . Whether it’s the traditional Graham-and-Dodd style or quantitative strategies used by modern-day “quants” , the principle remains the same: find fundamentally strong companies trading at unjustifiably low prices .
But here’s the twist : many investors—especially those relying on traditional cap-weighted indexes or regional biases—often get this strategy wrong ❌. Asness explains that “value” has been misinterpreted over the years , especially in the context of indexing and regional overconcentration in U.S. tech stocks (e.g., the “Magnificent Seven” ).
2022 and Beyond: What Happened to Value?
In 2022, value investing had a moment—it outperformed growth amid broader market turbulence ️. But since then? It’s been complicated .
If your idea of value investing is simply buying a cheap index fund that excludes the hottest tech names , you might be disappointed . Asness emphasizes the importance of strategy construction ️: quants who build well-diversified, long-short global portfolios (that avoid outsized bets on certain sectors or geographies) tend to hold up better over time ️.
Even with recent underperformance, value has “held its own”, especially when done thoughtfully—using diverse strategies and staying globally diversified .
Are Non-U.S. Markets the Hidden Value Play?
Here’s where things get even more interesting .
Asness believes that international markets represent an indirect value opportunity . The rest of the world is trading at significantly lower valuation multiples compared to the U.S., which has seen its success largely driven by multiple expansion —not just superior growth.
“The U.S. outperformed for a quarter-century,” Asness notes. “But 80%–85% of that outperformance came from rising valuations, not fundamentals.”
This presents a compelling narrative : if U.S. valuations are already sky-high ️, and international markets are cheaper , shouldn’t global diversification be the smarter play going forward?
While Asness cautions against making aggressive country bets , he favors a diversified global approach—especially for long-term investors who believe in mean reversion .
The Takeaway: It’s Not Value That Failed—It’s How People Use It
In a world chasing the next AI boom or crypto surge , value investing may seem outdated. But Asness makes it clear: the strategy is sound ✅; the execution is what matters ️.
Mind your methodology. Cap-weighted indexes may not capture value effectively.
Think globally. Don’t bet everything on U.S. dominance.
Understand the factors. Price-to-fundamentals is just the beginning—how you build your portfolio matters more than ever.
Listen to the full conversation:
Cliff Asness: “The Problem Was Never Beta. The Problem Was Paying Alpha Fees for Beta”
Now streaming on ️The Long View podcast by Morningstar.
In a financial world shaped by hype, tech rallies , and shifting economic paradigms , the age-old question resurfaces: Does value investing still work? According to Cliff Asness—founder and Chief Investment Officer of AQR Capital Management—the answer is a resounding yes ✅. But, as he passionately explains on ️The Long View podcast hosted by Christine Benz and Dan Lefkovitz of Morningstar, value investing only works if it’s done right .
What Is Value Investing—Really?
At its core, value investing means paying a low price relative to a company’s fundamentals . Whether it’s the traditional Graham-and-Dodd style or quantitative strategies used by modern-day “quants” , the principle remains the same: find fundamentally strong companies trading at unjustifiably low prices .
But here’s the twist : many investors—especially those relying on traditional cap-weighted indexes or regional biases—often get this strategy wrong ❌. Asness explains that “value” has been misinterpreted over the years , especially in the context of indexing and regional overconcentration in U.S. tech stocks (e.g., the “Magnificent Seven” ).
2022 and Beyond: What Happened to Value?
In 2022, value investing had a moment—it outperformed growth amid broader market turbulence ️. But since then? It’s been complicated .
If your idea of value investing is simply buying a cheap index fund that excludes the hottest tech names , you might be disappointed . Asness emphasizes the importance of strategy construction ️: quants who build well-diversified, long-short global portfolios (that avoid outsized bets on certain sectors or geographies) tend to hold up better over time ️.
Even with recent underperformance, value has “held its own”, especially when done thoughtfully—using diverse strategies and staying globally diversified .
Are Non-U.S. Markets the Hidden Value Play?
Here’s where things get even more interesting .
Asness believes that international markets represent an indirect value opportunity . The rest of the world is trading at significantly lower valuation multiples compared to the U.S., which has seen its success largely driven by multiple expansion —not just superior growth.
“The U.S. outperformed for a quarter-century,” Asness notes. “But 80%–85% of that outperformance came from rising valuations, not fundamentals.”
This presents a compelling narrative : if U.S. valuations are already sky-high ️, and international markets are cheaper , shouldn’t global diversification be the smarter play going forward?
While Asness cautions against making aggressive country bets , he favors a diversified global approach—especially for long-term investors who believe in mean reversion .
The Takeaway: It’s Not Value That Failed—It’s How People Use It
In a world chasing the next AI boom or crypto surge , value investing may seem outdated. But Asness makes it clear: the strategy is sound ✅; the execution is what matters ️.
Mind your methodology. Cap-weighted indexes may not capture value effectively.
Think globally. Don’t bet everything on U.S. dominance.
Understand the factors. Price-to-fundamentals is just the beginning—how you build your portfolio matters more than ever.
Listen to the full conversation:
Cliff Asness: “The Problem Was Never Beta. The Problem Was Paying Alpha Fees for Beta”
Now streaming on ️The Long View podcast by Morningstar.