The notion that each company has an intrinsic value – a value based on the fundamentals of its business – may be an obvious concept to those in investment markets.
Despite this, how best to determine a company’s value is the topic of much debate. Compounding the discussion is the continual evolution of global economies and accounting standards, which serve as a backdrop for changing perspectives on how to differentiate between what is “cheap” and what is “expensive.”
Such evolution can have a profound impact on active equity managers. Those unable to adapt as markets and industries evolve can be left using valuation metrics no longer relevant for the current environment.
The following insight looks at the evolution of global economies, accounting standards, and changing client demands, and the impact these changes have on the concept of “value.” The paper then looks at the way in which the Macquarie Systematic Investment team has evolved its approach to value to stay relevant in the 21st century.