Over the past decade the fund has returned 189.3 per cent - still managing to outperform the sector average (154.1 per cent), despite the style headwind.
But if you look at 2016 – the last time value stocks outperformed – it returned 31.1 per cent in that calendar year alone, compared with a sector average of 10.8 per cent.
Nick says there is currently an apathy around the banking sector, despite being recently cheap and having the best levels of capital they have had for 40 years.
He says: “For the first time in a long time they are making a case for themselves by returning capital to investors – with dividend yields increasing. That is making them compelling for income investors but also other investors are being paid to wait given they are investing in a cheap stock with a low valuation.”
Financials, at 30.3 per cent is currently the largest individual sector exposure in the 42-stock portfolio.
Nick also believes there is still an attractive discount in the UK market for the fund to take advantage of “with attractive dividend yields and a cheap large-cap stocks”.
Investors need to understand this deep-value style does lead to periods of under-performance, and returns can be lumpy, but the managers' core discipline of buying cheap stocks has proved successful in the long-term.
Darius McDermott is managing director of FundCalibre