{"id":2129,"date":"2023-03-09T04:25:18","date_gmt":"2023-03-09T04:25:18","guid":{"rendered":"https:\/\/www.syfe.com\/au\/learn\/?post_type=featured_posts&p=2129"},"modified":"2023-03-09T04:28:52","modified_gmt":"2023-03-09T04:28:52","slug":"3-investment-strategies-that-outperform-the-market-2","status":"publish","type":"featured_posts","link":"https:\/\/www.syfe.com\/au\/learn\/featured_posts\/3-investment-strategies-that-outperform-the-market-2\/","title":{"rendered":"3 Investment strategies that outperform the market"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

‘The stock market is a devise to transfer money from the impatient to the patient,’ argued Warren Buffett. <\/p>\n\n\n\n

From our research, while growth, value, and quality strategies have all outperformed the broader market over a 10-year timeframe, to January 2023 – over shorter periods, they have experienced bouts of underperformance and in some cases, extreme volatility.  <\/p>\n\n\n\n

When it comes to outperforming the market, having a clearly defined investment strategy and being comfortable with sticking to that strategy when markets move against you is key. <\/p>\n\n\n\n

Put another way, to really benefit from investing, you need to be patient.  <\/p>\n\n\n\n

3 investment strategies that outperform the market<\/strong><\/h2>\n\n\n\n

Below we review and examine three investment strategies that have outperformed the broader market in the last 10-years, including: <\/p>\n\n\n\n

    \n
  1. Growth investing<\/a> <\/li>\n\n\n\n
  2. Value investing<\/a> <\/li>\n\n\n\n
  3. Quality investing<\/a><\/li>\n<\/ol>\n\n\n\n
    Index<\/strong><\/td>Strategy <\/strong><\/td>1-Year<\/strong><\/td>3-Year<\/strong><\/td>5-Year<\/strong><\/td>10-Year <\/strong><\/td><\/tr>
    S&P 500 Value Index<\/td>Value investing<\/td>+3.08%<\/td>+9.66%<\/td>+8.17%<\/td>+10.91%<\/td><\/tr>
    MSCI World ex Australia Quality Index<\/td>Quality investing<\/td>-10.71%<\/td>+6.32%<\/td>+12.19%<\/td>+16.04%<\/td><\/tr>
    S&P 500 Growth Index<\/td>Growth investing<\/td>-19.43%<\/td>+7.68%<\/td>+8.68%<\/td>+12.16%<\/td><\/tr>
    S&P 500 Index<\/td>Passive ETF investing <\/td>-9.72%<\/td>+8.12%<\/td>+7.62%<\/td>+10.53%<\/td><\/tr><\/tbody><\/table>
    Source: S&P 500, Vanguard, and VanEck. Data correct as of the latest month-end, January 2023.<\/figcaption><\/figure>\n\n\n\n

    1. Growth investing<\/strong><\/h2>\n\n\n\n

    Growth investing is an investment strategy that focuses on investing in companies that are growing at a faster rate than the market as a whole. <\/p>\n\n\n\n

    Over the last decade we have seen the emergence of two phases of growth investing. The first involved the \u2018big tech trade\u2019 – which saw companies like Microsoft, Amazon, Apple, and Alphabet become synonymous with growth investing.<\/p>\n\n\n\n

    The second involved a flurry of growth investors pouring capital into profitless tech companies. Names like Peloton, Sea, and Carvana saw their shares rally multi-hundred percentage points on the prospect of far off market dominance. 2022 was a reality check for many of these companies, as investors across the board de-risked their portfolios and sold them down heavily.  <\/p>\n\n\n\n

    Despite different \u2018growth investing eras\u2019, here are some of the common characteristics of a growth investment: <\/p>\n\n\n\n

      \n
    • High growth rate, either on the top or bottom line, though discussions usually focus on high revenue growth<\/li>\n\n\n\n
    • Low or non existent dividends, with the company often focused on reinvesting dividends to drive business growth<\/li>\n\n\n\n
    • Trades on a high, or above market, earnings or revenue multiple<\/li>\n\n\n\n
    • Often operates in the technology industry  <\/li>\n<\/ul>\n\n\n\n

      Growth investing: performance summary  <\/strong><\/h2>\n\n\n\n

      Here\u2019s an annualised performance comparison, including outperformance, between S&P 500 Growth Index and the S&P 500 index:<\/p>\n\n\n\n

      Index<\/strong><\/td>1-Year<\/strong><\/td>3-Year<\/strong><\/td>5-Year<\/strong><\/td>10-Year <\/strong><\/td><\/tr>
      S&P 500 Growth Index<\/td>-19.43%<\/td>+7.68%<\/td>+8.68%<\/td>+12.16%<\/td><\/tr>
      S&P 500 Index<\/td>-9.72%<\/td>+8.12%<\/td>+7.62%<\/td>+10.53%<\/td><\/tr>
      Outperformance <\/td>-9.71%<\/td>-0.44%<\/td>+1.06%<\/td>+1.63%<\/td><\/tr><\/tbody><\/table>
      Source: S&P 500, Vanguard, and VanEck. Data correct as of the latest month-end, January 2023.<\/figcaption><\/figure>\n\n\n\n

      2. Value investing<\/strong><\/h2>\n\n\n\n

      Value investing is an investment strategy focused on buying companies that trade below the market average when it comes to key financial ratios such as price to earnings, price to book and price to sales. <\/p>\n\n\n\n

      Unlike growth investing, value stocks often have negative sentiment attached to them and are generally considered to be \u2018out of favour\u2019 with the market consensus. <\/p>\n\n\n\n

      Here are some of the common characteristics of a value investment: <\/p>\n\n\n\n

        \n
      • Often trades at a low multiple compared to the market average in terms of price to earnings, price to book, or price to sales ratios<\/li>\n\n\n\n
      • Negative sentiment attached to the stock – either for real or perceived reasons <\/li>\n\n\n\n
      • Tend to operate in cyclical industries, like financials and energy, but can operate in any industry  <\/li>\n\n\n\n
      • Usually a mature or late stage company, where organic growth is difficult to come by <\/li>\n<\/ul>\n\n\n\n

        Value investing: performance summary  <\/strong><\/h2>\n\n\n\n

        Here\u2019s an annualised performance comparison between S&P 500 Value Index and the S&P 500 index:<\/p>\n\n\n\n

        Index<\/strong><\/td>1-Year<\/strong><\/td>3-Year<\/strong><\/td>5-Year<\/strong><\/td>10-Year <\/strong><\/td><\/tr>
        S&P 500 Value Index<\/td>+3.08%<\/td>+9.66%<\/td>+8.17%<\/td>+10.91%<\/td><\/tr>
        S&P 500 Index<\/td>-9.72%<\/td>+8.12%<\/td>+7.62%<\/td>+10.53%<\/td><\/tr>
        Outperformance <\/td>+12.80%<\/td>+1.54%<\/td>+0.55%<\/td>+0.38%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

        3. Quality investing<\/strong><\/h2>\n\n\n\n

        Quality investing strategies are primarily focused on investing in companies which exhibit a high \u2018quality factor\u2019. While not anchored to a universal definition, this quality factor tends to centre on companies that have high quality earnings, reliable cash flows, and a dominant competitive position within one or more industries. <\/p>\n\n\n\n

        Here are some of the common characteristics of a quality investment: <\/p>\n\n\n\n

          \n
        • High return of investment ROE <\/li>\n\n\n\n
        • Proven earnings stability and earnings quality, as well as cash flow generation ability<\/li>\n\n\n\n
        • Lack of excessive leverage<\/li>\n\n\n\n
        • Competitively advantaged in a particular industry <\/li>\n<\/ul>\n\n\n\n

          Some well known \u2018quality investments\u2019 include Microsoft, Apple, and Home Depot. <\/p>\n\n\n\n

          Quality investing: performance summary<\/strong>  <\/h2>\n\n\n\n

          Here\u2019s a annualised performance comparison between MSCI World ex Australia Quality Index and the S&P 500 index:<\/p>\n\n\n\n

          Index<\/strong><\/td>1-Year<\/strong><\/td>3-Year<\/strong><\/td>5-Year<\/strong><\/td>10-Year <\/strong><\/td><\/tr>
          MSCI World ex Australia Quality Index<\/td>-10.71%<\/td>+6.32%<\/td>+12.19%<\/td>+16.04%<\/td><\/tr>
          S&P 500 Index<\/td>-9.72%<\/td>+8.12%<\/td>+7.62%<\/td>+10.53%<\/td><\/tr>
          Outperformance <\/td>-0.99%<\/td>-1.80%<\/td>+4.57%<\/td>+5.51%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

          This article\/webinar is brought to you by Syfe Australia Pty Ltd, AFS representative number 001295306 representing Sanlam Private Wealth Pty Ltd (AFSL 337927). Any information contained here is factual and should not be construed by you as financial product advice.  You should consider obtaining independent advice before making any financial decisions. Any reference to an investment\u2019s past or potential performance is not an indication of any specific outcome or profit. We do not intend for any statement made here to relate to the acquisition or disposal of any shares in the companies or other financial products named here.<\/sub><\/p>\n","protected":false},"featured_media":0,"template":"","categories":[],"tags":[],"class_list":["post-2129","featured_posts","type-featured_posts","status-publish"],"acf":{"title":"3 Investment strategies that outperform the market","thumbnail":"https:\/\/www.syfe.com\/au\/learn\/wp-content\/uploads\/2023\/03\/Untitled-design-71.png","order":"2","url":"https:\/\/www.syfe.com\/au\/learn\/featured_posts\/3-investment-strategies-that-outperform-the-market-2\/"},"yoast_head":"\n3 investment strategies that outperform the market (2023) - Syfe Australia<\/title>\n<meta name=\"description\" content=\"We examine 3 investment strategies that have outperformed the S&P 500 in the past, with a focus on value, growth and quality strategies.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"3 investment strategies that outperform the market (2023) - 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