Small cap value stocks, which research has shown usually outperform large cap stocks over the long term, have done even worse. Vanguard’s Small Cap Value ETF is up just 6.8 per cent over five years.
A pair of accounting professors, one from New York University’s Stern School of Business and the other from the University of Calgary’s Hasakayne School of Business, recently argued that the value strategy has been broken for far longer than most believe. They trace the problem back 30 years, when companies started expensing intangible assets like research and development and information technology – all things divorced from traditional book value measures.
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