ASX 200: Australian value stocks outperform growth amid federal budget tax changes

For the best part of a decade, Australian growth stocks trounced their value counterparts as low interest rates in the 2010s boosted the value of their future earnings. But value investors now believe their corner of the market is in the midst of a resurgence, which could be turbocharged by tax changes announced in the federal budget.

Investors started rotating into value stocks – those that are inexpensive relative to their earnings – as Australia emerged from the pandemic, when the Reserve Bank aggressively increased interest rates to contain inflation. The trade has been turbocharged over the past year as the RBA lifted rates in response to the spike in energy prices caused by the Iran war.

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