Followers of style

Followers of style, that is investment style, are wondering what is going to be the next big fashion.

Over the past couple of years value has been all the rage and managers, such as BNZ which use value manager Franklin Templeton have been on the winning side of the equation.

However, if you go back a couple of years value managers were questioning their existence as growth was trouncing it on the returns front.

However, Franklin Templeton Melbourne-based investment manager Peter Wilmshurst says it is now "far less clear whether growth or value will outperform" in the period ahead.

He describes the past five years, where there has been pronounced differences between the two styles, as "quite unusual."

One prediction he makes is that the difference between the two styles is coming together after a number of years of unprecedented separation.

Wilmshurst says as a value manager the easy yards have been made and it's harder to find good value stocks.

He says shares are generally considered to be cheap relative to bonds and cheap relative to inflation, but not particularly cheap in their own right.

Another recent visitor to New Zealand, Morningstar boss Don Phillips, believes that the environment currently favours the value managers. He reckons there are plenty of value stocks to choose from, while growth managers are struggling to find suitable companies.

His view is that growth managers are currently experiencing the same situation value managers had a couple of years ago - that is understanding their raison d'être.

One of the areas Templeton sees opportunities in is the tech sector. Wilmshurst says the company was significantly underweight tech during the bubble, and now it is in an overweight position.

He says the companies it is buying are not the big name players like Microsoft, Oracle, Nokia and Cisco, but companies at the next level down.

Also Templeton favours Europe and Asia (ex Japan) over the United States. Currently 33% of the Templeton portfolio is invested in North America compared to a benchmark of 58.2%