Beware 'value traps' in bargain bins: fund managers

Singapore

IT does take courage to buy value stocks, Andrew Lyddon, an equity fund manager at Schroders, said at the November Schroders International Media Conference 2018 in London. While a market correction can translate into higher odds of oversold stocks and overpriced risks, it also requires a certain boldness to buy and hold onto an undervalued stock, especially if prices do not recover soon.

It is "not for everyone's stomach", Mr Lyddon said. "Value investing at its heart is a behavioural strategy. It benefits from the behaviours in stock markets - the fear, grief, envy and worry when your portfolio is going down for days on end; the exuberance when you see it rising higher day after day. Value investors try to step out of that, strip out those emotions, and exploit them for their own benefit."