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Opportunity in active value – an update

Writer's picture: Joseph MezrichJoseph Mezrich

Updated: Oct 15, 2024

In a recent post, I highlighted an example of what can be missed when using a passive index approach to value. In the consumer staples sector of the S&P500, the long-short returns for Earnings/Price and Sales/Price have diverged massively since the end of March. The divergence happens because of industry effects within the sector. The Earnings/Price strategy is long food and tobacco production, while short food and staples retail. At the same time, the Sales/Price strategy is long food and staples retail, while short household products and food and tobacco production. 

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