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Two basket players

Hunting for Deep Value amid an "everything" bull market


 

Despite strong gains in equity and other asset markets both in 2023 and this year to date, we are extremely excited about selected value investing opportunities from an asset allocation perspective.

Today, in the context of short- and long-term interest rates that are likely to fall over the next 12-24 months, the backdrop for several out-of-favour, cheap asset classes and regions offers extremely attractive opportunities for the patient investor.

We identify four long-term deep value investment opportunities: emerging markets, such as Brazil or Mexico, which offer good potential thanks to raw materials production and reshoring, the United Kingdom against a backdrop of catalyst linked to mergers and acquisitions activity, commodities which suffer from imbalances between supply and demand, and finally clean energies which remain a major focus after suffering from a rapid increase in long-term financing costs.

Our recommendations

Favour UK FTSE 100 and MSCI UK stock and ETF exposure. Within emerging markets, look to the attractive income offered by emerging market sovereign bonds, Latin American stocks and ETFs/funds, and broad emerging market stock exposure.

Copper, aluminium and tin have surged to their highest levels since January 2023, driven largely by supply issues. Long-term mining under-investment supports a bullish medium-term view on copper. Clean energy is a contrarian value & growth theme where the underlying need has only intensified.

With long/short strategies.

Key risks

With investors further ignoring deep value opportunities and influencing the valuations of these markets.

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