Global funds run by Dodge & Cox, UBS and M&G have been most closely aligned with the value investing style over the past three years, Trustnet research shows.
Value investing involves buying stocks that appear cheap relative to their fundamental worth, typically measured by metrics such as price-to-earnings or price-to-book ratios. The underlying theory is that markets often misprice companies, creating opportunities for investors willing to wait for share prices to recover.
The value style endured a prolonged period of underperformance in the decade following the global financial crisis, when ultra-low interest rates pushed investors towards high-growth technology companies, whose future earnings were worth more when discounted at near-zero rates.
This began to shift from 2022, when central banks raised interest rates sharply in response to inflation, making richly valued growth stocks less attractive. More recently, stretched valuations among US technology giants and mounting concerns over the return on artificial intelligence investment have accelerated a rotation towards cheaper, value-oriented businesses.
In this article, Trustnet ranked all funds in the IA Global sector by their three-year correlation to the MSCI AC World Value index to identify those most aligned with the value style.
Source: Finxl. Correlation to MSCI ACWI Value and total return in sterling between 1 May 2023 and 30 April 2026.
The highest correlation to the value factor comes from UBS FTSE RAFI Developed 1000 Index and Invesco RAFI All-World Fundamental Value UCITS ETF, both at 0.98.
These funds track RAFI Fundamental stock market indices, which weight companies by measures of business size (such as sales, cashflow, and book value) rather than share price. This tilts the portfolios towards cheaper, undervalued companies and away from expensive ones, giving the funds a lean towards value investing without being pure value funds.
Because of this, both portfolios have a lower weighting to the US and information technology stocks than the MSCI AC World index. However, this has not held back recent performance: the funds have made more than 60% over the three years under consideration, putting them in the first quartile of the IA Global sector.
The highest-ranked active fund in this research is Dodge & Cox Global Stock, with a 0.94 correlation to the value index and a second-quartile return of 43.4% over three years. The fund focuses on finding well-established companies that look temporarily undervalued but have a favourable outlook for long-term growth.
It is underweight the US (although the country is still the largest geographic allocation) and tech stocks, while being overweight Europe, emerging markets, the UK, financials and healthcare. The portfolio trades on a 12.8x price to forward earnings ratio, compared with the MSCI AC World's 17.1x.
Analysts at Titan Square Mile, which gives Dodge & Cox Global Stock an 'AA' rating, said: "Given the fund's investment philosophy and process, the resultant portfolio will typically have more of a value bias, i.e. a preference to stocks whose share prices are currently deemed to be undervalued in relation to the firm's future potential.
"In our opinion, one of the key attractions here is that the fund is not completely at the mercy of this style of investing, meaning that in momentum or more growth-driven markets, performance may offer greater consistency when compared to funds with a more overt value focus."
Performance of Dodge & Cox Global Stock vs sector and benchmark over 3yrs
Source: FE Analytics. Total return in sterling between 1 May 2023 and 30 April 2026.
Of course, there are plenty of funds with a clear focus on value that have made the list including Dimensional International Value, M&G Global Strategic Value, Schroder QEP Global Active Value and State Street SPDR MSCI World Value UCITS ETF.
Of these, M&G Global Strategic Value has made the highest three-year return and its 67.7% gain is enough to beat the MSCI AC World over this period, despite underweights to the US and the information technology sector.
Co-fund managers Richard Halle, Shane Kelly and Daniel White look for cheap or out-of-favour companies while avoiding those with problems that could prevent their share prices from improving over time. This has led to top holdings such as bank Wells Fargo, energy company TotalEnergies and drugmaker Bristol-Myers Squibb, while many global equity funds are heavily invested in the Magnificent Seven.
At the start of the year, the managers said: "The ongoing diversification away from the US is driving broadening of global equities, with flows increasingly moving to other developed international markets and many of those markets outperforming the US. We believe this trend still has room to run, supported by the prospect of continued US dollar weakness and persistent demand for geographic diversification.
"Importantly, many non-US markets, across the UK, Europe, Japan and broader developed ex-US regions, still exhibit value that remains under-recognised, in our view. This creates an attractive backdrop for disciplined stock picking."
Other themes apparent in the list of global funds with the highest correlation to the value index include equity income.
Franklin Global Quality Dividend, iShares MSCI World Quality Dividend Advanced, GS Global Equity Income Portfolio and JSS Equity Global Dividend all focus on dividend-paying stocks. Equity income strategies tend to naturally tilt towards value, as high-yielding stocks are often cheap on price-to-earnings or price-to-book measures.
Several funds also invest in smaller companies, which historically trade at cheaper valuations than large-caps. L&G Global Small Cap Equity Index, State Street SPDR MSCI World Small Cap, iShares MSCI World Small Cap, Vanguard Global Small-Cap Index and GS Global Small Cap CORE all fit this theme.