Value investing is a strategy where investors look to buy companies that are trading at a share price below their ‘intrinsic value’ – another way of saying what you’d expect to pay for a company’s shares based on its expected future profits.
A company might be trading at a low price for various reasons, like poor operational performance, a recent change in management, or emerging competitive threats.
However, value investors seek out companies where these challenges are likely to be temporary.
They believe that, with time, the company can overcome these short-term issues and return to its former strength, rewarding patient investors in the process.
This article isn’t personal advice. Remember, investments and any income from them can rise and fall in value, so you could get back less than you invest. Past performance isn’t a guide to the future. If you’re not sure if an investment’s right for you, ask for financial advice.
When does value investing do well?
Value investing can be effective in various different market conditions.
For example, when interest rates are rising, like in 2022, when value stocks outperformed their growth counterparts.
During this period, central banks around the world raised interest rates to combat inflation.
As a result, investors began moving away from the growth stocks which had performed well in the post-COVID era. This was because of concerns that their future earnings would be eroded by inflation and they’d lose access to cheap borrowing to fund expansion.
Instead, investors turned to companies that were more reliable and predictable.
These businesses had been overlooked in favour of faster-growing growth companies, and their share prices reflected this.
However, with the shift in investor priorities toward companies better equipped to handle higher inflation and interest rates, these previously ‘unloved’ companies showed their worth.
With the current concerns that tariffs and trade tensions could reignite inflation, potentially prompting central banks to raise interest rates again, value stocks have come back into the fray.
Value investing can also do well during periods of economic uncertainty, because fears of a recession or a slowing economy often push investors toward more stable parts of the market.
For example, sectors like consumer staples and healthcare tend to remain resilient, as demand for their products typically doesn’t fluctuate much if economic conditions deteriorate or prices rise.
Even as consumers cut back on discretionary spending, they continue to prioritise essentials like food and medicine.
The added diversification benefits of value stocks
As value investing focuses on the more ‘unloved’ parts of the market, value funds often look very different from both growth funds and the broader index.
Over time, indices like the MSCI World have become increasingly concentrated in a few countries, sectors, and companies.
For example, as at the end of April 2025, 71% of the index is made up of US companies, 24% is allocated to the technology sector, and just three companies – Apple, Microsoft, and Nvidia – account for over 10% of the index.
This is where value-focused funds can come into play.
They often avoid areas that have recently performed well, such as US stocks and the technology sector, as they tend to view these parts of the market as too expensive.
As a result, investors in value funds gain more exposure to regions and sectors that are typically underrepresented in passive or growth strategies – like Europe and the UK, which currently feature more prominently in value portfolios.
How to invest in value stocks – 2 fund ideas
Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
For more details on each fund and its risks, use the links to their factsheets and key investor information.
Artemis Global Income
Jacob De Tusch-Lec aims to provide investors with rising income and capital growth by taking a contrarian view and investing in opportunities that he believes aren’t fully recognised by the wider market.
This means performance can often look different to the benchmark and his peers.
Investing this way requires patience, and it won't always work.
So, it's important for a portfolio to contain a range of different investment styles, as they fall in and out of favour over time, and what works well now might not work so well in the future.
De Tush-Lec has close to 15 years’ experience in investing this way and is supported by James Davidson.
Unlike most funds, De Tush-Lec takes a view on the direction of the global economy. He considers factors like the economic cycle and interest rates, which helps him identify country and sectors to look at in more detail. He then finds the best companies that provide a dividend and are trading at an attractive valuation.
He currently sees the most opportunities in Europe where over a third of the fund is invested. He invests over a fifth of the fund in North America, however this is much less than the benchmark. De Tush-Lec also utilises his ability to invest in emerging markets and smaller companies, which can add risk.
Investors should note that this fund does have the flexibility to use derivatives, which increases risk. Charges are also taken from capital which can increase income, but reduce the potential for capital growth over time.
Annual percentage growth
30/04/2020 to 30/04/2021 | 30/04/2021 to 30/04/2022 | 30/04/2022 to 30/04/2023 | 30/04/2023 to 30/04/2024 | 30/04/2024 to 30/04/2025 | |
|---|---|---|---|---|---|
Artemis Global Income | 38.98% | 10.04% | -3.47% | 29.64% | 18.74% |
IA Global Equity Income | 26.05% | 8.55% | 3.68% | 10.70% | 4.45% |
MSCI AC World | 33.38% | 4.72% | 2.48% | 18.47% | 5.31% |
Lazard Global Equity Franchise
The fund aims to deliver long-term growth by investing in companies with more predictable earnings and competitive advantages.
The managers focus on companies they believe are undervalued – this means their share prices don’t yet reflect their growth potential.
The fund is managed by four co-managers who have been with this fund since it launched in June 2015.
The team look for businesses that meet their ‘franchise’ model. These are companies that have strong balance sheets, competitive advantages, and whose earnings they can easily forecast.
They can then rank these high-quality companies based on their current share price against what they believe to be their true value. They then invest in those they think offer the best opportunities.
The team currently sees the most opportunities in the Utilities sector where 18% of the fund is invested, they also see plenty of opportunities in Healthcare, Industrials and Financials.
At a country level the fund has over a third invested in the US, however this is much less than the benchmark. They also have just under a fifth invested in the UK and 17.46% in Italy.
Investors should note that the fund aims to hold between 25-50 companies. This is a relatively small portfolio and means each investment can contribute significantly to returns, although this approach increases risk. They can also invest in smaller companies and emerging markets which also adds risk.
Annual percentage growth
30/04/2020 to 30/04/2021 | 30/04/2021 to 30/04/2022 | 30/04/2022 to 30/04/2023 | 30/04/2023 to 30/04/2024 | 30/04/2024 to 30/04/2025 | |
|---|---|---|---|---|---|
Lazard Global Equity Franchise Fund | 36.35% | 18.13% | 6.46% | 2.25% | 3.99% |
IA Global | 33.57% | 0.51% | 0.58% | 13.87% | 0.25% |
MSCI World | 33.01% | 6.86% | 3.61% | 19.41% | 5.60% |
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