Marketing communication. For professional investors only.
Maider Lasarte, responsible for Business Development at Ossiam, outlines a unique approach developed for both growth and value markets.
Maider Lasarte, why do you work with the Shiller P/E ratio?
More than 30 years ago, Professor Robert Shiller, the well-known US economist and Nobel laureate in economics, developed the Shiller P/E ratio. It is also called the CAPE ratio, which stands for cyclically adjusted price-earnings ratio.
But it wasn’t just a new valuation metric: investors, such as Ossiam, realized that it can be a powerful tool when investing and allocating to certain sectors too. Past performance does not predict future results.
During which market phases does the CAPE Shiller concept work best?
We found that the concept can be well suited to navigate through different market phases, not just value or growth regimes. So, it works in both growth and value markets. Of course, the concept follows a value approach, because we look at valuation when we pick the attractive sectors – that’s based on the CAPE ratio.
But we are looking for sectors that are cheap versus their own history. Over the past ten years, we have been in a growth market, but the strategy has also been allocated to so-called growth names at various times, including the start of 2023 when technology names looked cheap, for instance.
Is the CAPE concept compatible with ESG and sustainable objectives?
Ossiam committed to incorporating ESG considerations years ago. We have developed different ESG solutions for different asset classes and with different objectives, including for the Shiller strategies. There are also low-carbon CAPE solutions, which integrate ESG features and won’t invest in the worst offenders in each selected sector.
- Find out more here.
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