Are Higher Interest Rates a Boon for Value?AreHigherInterestRatesaBoonforValue?

While 2022 shaped up to be better for value investment strategies¹ than recent years, the strategy’s outperformance came during a period of rising interest rates, just as value’s recent underperformance occurred during a period of falling interest rates. The strong correlation between the value factor and interest rates over the past 10 years versus a relatively benign historical relationship has puzzled many market commentators and participants.

¹Those going long cheaper stocks and short expensive stocks.