Is Amos Value a pure value fund?

Amos Value is a value fund in the sense that a margin of safety against fair value is always required. But we do not chase low multiples. We chase mispricing. That means companies whose quality and future cash flows the market is temporarily undervaluing. It requires the business model to be understood and quality to be high. The label is not chosen. The process is.

How do value funds perform relative to growth funds?

It varies greatly depending on market regime. During periods of low interest rates and high optimism, growth stocks tend to dominate. In normalised interest rate environments and during market downturns, value strategies tend to recover ground. No strategy always wins.

Why have value funds underperformed in recent years?

This is partly due to an exceptional low-rate environment that favoured discounting future earnings, partly due to flows towards passive index funds and partly due to actual earnings growth in the companies dominating the index. It is not proof that the value strategy is broken.

Glossary

Value fund

A fund that systematically looks for companies trading below their true value. But value is about more than just low multiples.

What it is

More than low multiples

A value fund is an equity fund that applies the principles of value investing. This means the manager systematically searches for companies whose market price falls below the estimated intrinsic value, with the goal of profiting when the market eventually recognises the true value. Value investing as a philosophy was popularised by Benjamin Graham and developed further by Warren Buffett. But there are many interpretations. Some value funds chase companies with low P/E and P/B multiples regardless of quality. Others, like us, seek quality companies that are temporarily mispriced by the market.

Mispricing over low price: Traditional value funds chase low multiples regardless of company quality. We look for companies whose price is below fair value.
A proven company, at the right price: We buy companies that have already proven they can grow earnings per share, navigate crises and allocate capital effectively. Quality must be proven first. Only then do we look at price.
Resistance to FOMO: Calculating fair value before a purchase gives the process a natural anchor against FOMO in both directions. We only buy when the price is below fair value. When the value is reached, we sell, even if the stock keeps rising.

How we differ

Quality with a margin of safety

Classic deep value looks for companies with extremely low multiples, regardless of underlying quality. It sometimes finds bargains, but it also buys value traps: companies that look cheap because they deserve to be. Amos Value sets a quality bar before price is even considered: the business model must be understood, profitability proven and the competitive advantages clear. The margin of safety is the last step, a requirement that the price has to be right too.