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After a long, dark, cold winter, green shoots have emerged across the landscape of systematic value strategies those that buy stocks that are cheap relative to some fundamental measure of their worth. Exactly what has plagued these approaches for so long has been widely debated. And while the recent thaw has been welcomed by many long-suffering value disciples, even some of the factor’s biggest fans worry that it may be a false spring.
Here, I’ll look back at value’s cold streak, survey some of its potential causes, touch on the catalysts behind its turnaround, and explore whether there’s any value left in value today.
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Adding international exposure is one of the first steps toward a diversified portfolio. Even minimalist investors usually carve out a portion of their portfolios for non-U.S. stocks after adding exposure to domestic stocks and bonds. International stocks are subject to myriad factors that can lead to divergent performance, including local market conditions, currency movements, exposure to different sectors and industries, and political and economic factors. These traits mean they often show different performance patterns both relative to the U.S. market and versus other international markets.
However, in our recent examination of asset-class correlations, the 2021 Diversification Landscape, we found that the benefits of international diversification can be surprisingly elusive.