Value stocks or momentum stocks? Why not both?

If you want to beat the professionals over the long term, put part of your portfolio in momentum stocks, and a part in value stocks, says Merryn Somerset Webb.

Open your Isa account and take a quick look at the funds you hold. How many of them are value plays? How many of them are momentum funds? How many are fully focused on small-caps? Almost none? If so, your portfolio might not be anywhere near as good as it could be.

Look to the past and you will see that the best-performing strategies over almost any longish period of time are value, momentum and small-caps. Take value. In his book Deep Value Investing (to which I wrote the foreword) Jeroen Bos chucks out some numbers.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.