A sea change

[OhNoNotimAgain]

Ever since QE started in March 2009 it has favoured smaller, less liquid mainly growth shares.
Value as an investing strategy underperformed for years.
That started to change at the beginning of 2016 after QE effectivley stopped in the middle of 2015.
What is interesting is that it is now becoming more evident in the historic performance data.
Over the the last three years the UK All Companies sector has risen 26.2%. That is is now surpassed by the FT All Share which is up 33.2%. This situation of the index, which has no costs, being outperformed by the average UK investment fund only started a few months ago after a nine years when the opposite was true, because of QE.

Logically, we would expect the index to beat the average of the funds simply because of costs. The fact that it did not for so long was a clear demonstration that the average managed fund has a bias to smaller, less liquid growth companies.

That bias to those shares is now unwinding and is already having an impact on performance tables, which will only increase over time.

So, in summary, the seven years from 2009 to 2016 were an aberration in investment terms.

[Lootman]

the average managed fund has a bias to smaller, less liquid growth companies.

That bias to those shares is now unwinding and is already having an impact on performance tables, which will only increase over time.

So, in summary, the seven years from 2009 to 2016 were an aberration in investment terms.

Only increase over time?

So there is a risk-free profit to be made by shorting growth and being long value? With that level of certainty and opportunity I suspect that you will soon be the richest person on the planet

[UncleEbenezer]

So there is a risk-free profit to be made by shorting growth and being long value? With that level of certainty and opportunity I suspect that you will soon be the richest person on the planet

Rich and strange, of course.
Nothing of him that remains, but doth suffer a sea change, into something rich and strange.

QE was straight from Sir PTerry's Pork Futures Warehouse: futures (i.e. credit) had been traded on things that never existed (the means to pay it), so reality had to adjust. They chose money-printing to fill the void rather than allow house prices to correct meaningfully, and yes of course that had a big side-effect on other assets: short-term on liquid assets that had crashed, longer-term on less-liquid assets bringing them into line with everything else.

It's just what another round of 1970s-level inflation looked like in a world where official measures of inflation are corrupted and consumer prices were slashed by the rise of China - whose economy eclipsed our own in setting those Feelgood interest rates.

[OhNoNotimAgain]

the average managed fund has a bias to smaller, less liquid growth companies.

That bias to those shares is now unwinding and is already having an impact on performance tables, which will only increase over time.

So, in summary, the seven years from 2009 to 2016 were an aberration in investment terms.

Only increase over time?

So there is a risk-free profit to be made by shorting growth and being long value? With that level of certainty and opportunity I suspect that you will soon be the richest person on the planet

Well it works for Buffett.