Publications

As we entered 2025, U.S. stocks continued their long-term performance dominance vs. international stocks. However, the dramatic outperformance of international stocks vs. U.S. stocks (MSCI EAFE vs. S&P 500) and value stocks vs. growth stocks (MSCI World Value vs. MSCI World Growth) in the first quarter of 2025 reminded us again that diversification can be an important component to guard against quick swings in market sentiment.

In this letter, we explore how value exposure could influence the risk and return profile of a diversified portfolio across various cycles. To illustrate this, we created a hypothetical equal-weighted portfolio consisting of the MSCI EAFE Growth Index, the MSCI ACWI ex USA Quality Index, and the MSCI EAFE Momentum Index. We then added the Brandes International Equity Strategy to this portfolio (allocating 25% to each component) to compare its risk and return profiles before and after the addition. As it turns out, value investing is not dead!

The impressive performance of U.S. stocks over the past decade has led many investors to question their allocation to international stocks and their place in a diversified portfolio. We believe international stocks are attractive for several reasons, and that it is likely the next decade could look different.

What are the prospects for value in a market environment that bears a lot of similarities to the one from 1974?

With the value-led cycle well into its fourth year, many wonder whether the value run is nearing its end, especially given the performance of U.S. growth stocks in 2023. However, there are several reasons why we remain bullish on value.

Today we celebrate 50 years since the founding of Brandes Investment Partners. As noted in the 1974 letter from Benjamin Graham to Charles Brandes, the firm was to be operated along “Graham principles” and we are proud to say that it is still operated exactly that way today.

When value did well, Brandes tended to do even better. With nearly 50 years managing value strategies, we strive to deliver benchmark-beating results through our research-driven approach. While we cannot predict performance, we are optimistic for value given the interest-rate environment and the valuation dispersion between value and growth stocks.

With financial media full of articles and reports about the challenges of investing in China, many investors wonder if China is even investible given its current economic troubles, the geopolitical tensions surrounding Taiwan, and many other factors. In this letter, we share some observations about how we navigate this major market on behalf of our clients. We are cognizant of the significant macro issues and believe selectivity is key when evaluating investment candidates. As with all investments that we make, we do our fundamental work to determine if our estimation of the risk/reward trade-off (relative to opportunities elsewhere) is appropriate for deployment of client capital.

While value stocks have outperformed the broad market over the last 3 years, after a decade of underperformance, we have found that many portfolios likely have a growth performance bias and could be missing the potential diversification benefits from what we consider a “true” value exposure that may be needed if the next decade is different than the last.

The June 2023 "Brandes Letter: Investing is a People Business" emphasizes the human role in investing. Ted Kim, our automotive analyst, exemplifies our ideal of independent thinking. Our process involves research, investment committees, and the margin of safety principle (the margin of safety is the discount of a security’s market price to our estimate of its intrinsic value). Ted's view on Tesla highlights the firm's approach to estimating a company’s valuation. Our letter underscores Brandes' belief in human insight as we seek to create value for our clients.

Is your bond portfolio falling short of fixed-income return targets? It may be time to consider a value-focused approach.

We have observed that U.S. small cap value stocks currently trade at attractive levels relative to both U.S. small and large cap growth stocks.

From persistently large valuation gap to elevated inflation, we believe there are reasons to remain optimistic about the long-term potential of value stocks.

The State of Value Investing

Has the 40-year fixed income party come to an end?

Over the longer term, income is the most important determinant of fixed income returns.

How being “Purpose-built for Value” makes Brandes different

How “value” fits long term investment goals

A proactive guide for Financial Advisors

A mental health checklist

The enduring value of Graham Principles

Seeing encouraging signs for value stocks

The case for “value” in a well-diversified portfolio

As markets shift, diversification has helped smooth the ride

Rising inflation and interest rates may bode well for “value”

See how “value” led following the last 14 recessions

“Value” is in the eye of the beholder

See why we believe select China-based businesses remain attractive for the long term

We consider it our job as an active value manager to distinguish potentially undervalued businesses from those that may merely be "cheap."

See why we believe non-U.S. stocks represent significantly underappreciated potential

Fundamental, research driven investing

Louis Lau, CFA, Director of Investments at Brandes Investment Partners shares his thoughts on US-China relations and investment opportunities within China

We believe diversification is key as it helps investors to improve its long-term risk/return potential.

Could inflation be a tailwind for value stocks?

Four big questions: Why? When? How? What?