A Different Degree of Wealth

Unlocking the Value Premium: The Secret Ingredient of Diversified Portfolios

The value premium refers to a type of factor-based investing where investors can achieve outsized returns by investing in value stocks – those stocks that are trading below what they are fundamentally worth compared to their market value. Historically, value stocks have outperformed growth stocks and the broader market over long periods, but performance certainly varies quite a bit over months and even years based on market conditions. Nevertheless, this concept has been a fundamental part of many investor strategies for decades and is frequently overlooked due to perceived inferiority. However, a focus on value can provide higher returns as a compensation for the perceived higher risk and lower growth prospects at the time of investing, and it’s an excellent tool for diversifying a portfolio.

Why the Value Premium Matters

Value stocks serve as a critical component in a diversified investment portfolio. They tend to perform well during different market phases compared to their growth counterparts, which are typically more sensitive to market cycles. Investing in value stocks can be a strategic hedge against market unpredictability and inflation, enhancing a portfolio’s resilience against economic downturns. This is because value stocks are generally priced lower relative to their fundamentals (like earnings or book value), and thus, they have room to appreciate when the market corrects these inefficiencies.

It’s important to keep in mind this concept is far from new. The value premium has persisted over decades despite various market changes and economic cycles, making it a reliable element for long-term investment strategies focusing on real value that is eventually recognized by the market. Its persistence is seen as an indication of the market’s inefficiency at correctly pricing these stocks at all times, which provides opportunities for discerning investors buying undervalued companies before they return to fair value or higher.

How to Integrate the Value Premium in Your Portfolio

Integrating the value premium into an investment strategy involves a methodical approach to selecting stocks that are undervalued by the market but have strong fundamentals. Here are some actionable insights for investors looking to benefit from the value premium:


  • Factor-Based Funds: Investing in factor-based ETFs or mutual funds can be an effective way to gain exposure to value stocks. These funds are designed to aggregate stocks that meet certain predefined criteria indicative of value
  • Diversification: While the core idea of value investing is to pick undervalued stocks, it’s crucial to ensure these stocks are spread across various sectors and industries. This diversification helps mitigate the risk of over-exposure to any single sector which might be disproportionately affected by specific economic events.
  • Long-Term Orientation: Investing with a value premium approach requires patience. Value stocks may remain undervalued for prolonged periods before the market recognizes their true worth. Thus, a long-term horizon is essential to realize the gains associated with this strategy.


The Role of Value Stocks in Portfolio Diversification

Value stocks are particularly effective for portfolio diversification because they behave differently from growth stocks and other investment styles. Their market performance is less correlated with high-growth sectors such as technology and more with traditional industries, which often buck market trends. This unique characteristic of value stocks helps in smoothing out the portfolio’s performance over time, reducing overall volatility and providing steadier returns. Moreover, value investing encourages the assessment of companies based on intrinsic worth rather than market trends, which can lead to more informed investment decisions that are based on fundamental analysis rather than speculative factors. This approach reduces risk and enhances the potential for steady growth with uncorrelated returns, a hallmark of diversification.

Navigating Potential Challenges in Factor-Based Investing

Despite its many advantages, investing in value stocks isn’t without challenges. Nothing in the world of investing is a sure thing, but there are unique risks to bear in mind when taking a factor-based approach like a value premium. The key risks include:


  • Market Recognition: The market may take a long time to recognize the true value of undervalued stocks, during which the investor must maintain patience and a strong investment resolve.
  • Economic Sensitivity: Value stocks may be more sensitive to economic downturns as they often belong to cyclical industries.


In light of these risks, investors need to stay informed and possibly diversify their approach to include other investment factors like momentum or quality, which can complement the value strategy and help mitigate some of these risks.


Embracing the Value Premium

The value premium remains a potent strategy for those seeking to enhance their investment portfolios’ potential for high returns and reduced risk. By carefully selecting undervalued investments and integrating them into a well-diversified portfolio, investors can not only leverage the historical resilience of these investments but also position themselves favorably for capitalizing on market premiums. As with any investment strategy, success in leveraging the value premium requires knowledge, patience, and a well-calibrated approach tailored to individual financial goals and risk tolerance, but it remains an excellent tool in the investor’s arsenal.

If you have any questions, give us a call or read Chapter 5 of “Wealth on Purpose” by Bryan Ballentine.

Have a great weekend!

Sources: Located at the bottom of the article.

Golf Tip of the Week

How to play ‘Wolf’: A simple guide to one of golf’s most fun strategic betting games

Golf Games Explained is exactly what it sounds like. You want to mix it up and try something new for once? Well, someone has to do the thankless work of playing different golf formats and telling you if it’s worth it. You can thank me later.

We hate to make a sweeping generalization, but it feels safe to say that the majority of golfers out there stick to the standard four-ball (best ball) match play format when playing for money. Two vs. two, shots divvied up, perhaps some side action. You know the drill.We’re not saying there is anything wrong with that, mind you. It’s a great way to keep the whole group involved, and it’s easy to keep track of for whoever is keeping score. Every now and then, though, you’ve gotta spice it up when gambling on the course. One of the best “let’s change it up today” golf games is Wolf.

If you’re reading this, you likely have heard of Wolf before but have never played it and would like to learn more. Below, we’ll explain the format, the number of players required to play and the different variations of Wolf that can turn your standard Saturday game into something a bit more fun and complex.

Number of players required: Wolf can be played with just three players, but the game works best with your standard foursome.

Best for: Groups looking to break from the norm. Golfers who don’t like to rely on others. Golfers that do like to rely on others. People who enjoy strategy. Gamblers.

How to play: Your first order of business when playing Wolf is to pick an order on the first tee which will rotate throughout the round. There are no “honors” in Wolf. Each hole, one of the players in the foursome will be the “Wolf,” and then you rotate down the line as the round continues. So on Hole No. 1, if the order is Player A, Player B, Player C and Player D, Player D is the Wolf on Hole No. 1, and Player A would automatically be the Wolf on Hole No. 2. Player B would be the Wolf on Hole No. 3, Player C the Wolf on Hole No. 4, and then the order would come back around to Player D being the Wolf on Hole No. 5. The Wolf goes last so they can see everyone’s tee shots before they hit their’s. 

As the Wolf, you can choose to go it alone (like a LONE Wolf, get it?) before or after you’ve hit your tee shot, OR, you can choose a playing partner for that specific hole. You can do this before anyone hits their tee shots, or you can wait to see Player A’s tee shot. If it’s good, you’ll likely choose Player A to partner up with, which then sets up a one-hole match between Player A and D against Player B and C. If you do not choose Player A after their tee shot, once Player B hits their tee shot, Player A is no longer an option to partner with. You’d then have to choose Player B after they hit their tee shot. If you do not choose Player B, your only two options left once Player C hits are choosing Player C as your partner, or going at it alone. If you see Player C’s tee shot and don’t like it, you are now the lone Wolf, creating a pressure packed tee shot and a 1 vs 3 best-ball match between Player D (the wolf) vs. Players A, B and C. Again, as a reminder, you can choose to go it alone at any point on the tee box when you are the Wolf.

Now, how do you accumulate points and keep score? That’s sort of up to you, particularly if you want to put a dollar amount on it or a point amount on each hole. This should be decided and agreed on on the first tee. Generally, choosing to be the lone Wolf and winning the hole comes with a larger point total because it’s more difficult to win a hole in a 3 vs. 1 best-ball match. For example, if you choose to go it alone and win, you’d be awarded 2 points. If you choose to go it alone and lose, the other three players would be awarded 1 point each to your 0. If you choose a partner and play a 2 vs. 2 best-ball match, the winning side would also receive 1 point each while the losing side receives 0 each. The player with the most points after 18 holes would win the game of Wolf.

VariationsThere are a number of variations on Wolf, many of them involving side action throughout the round. This is, again, up to the group. You can make side bets on who will win the hole, how many points each player might accumulate, etc. One thing a player can also do is deny partnering with the Wolf, thus making that player the lone Wolf on the hole. Something the Wolf can also do is blindly bet on themselves before a tee shot is even struck on a hole, which doubles the bet or point total, depending on what you agree on. In a three-man version of the game, the player who hits the second-best tee shot of the group is automatically the Wolf.

Tip adapted from golfdigest.comi

Recipe of the Week

Cinnamon Pretzel Bites

4 Dozen


Pretzel Bites

  • 1 tsp. granulated sugar
  • 1 1/4 tsp. active dry yeast
  • 2 1/4 c. (270 g.) all-purpose flour, plus more for surface
  • Kosher salt
  • Cooking spray
  • 1/2 c. baking soda


Cream Cheese Frosting 

  • 3 tbsp. unsalted butter, melted
  • 1/3 c. granulated sugar
  • 4 tsp. ground cinnamon
  • Kosher salt
  • 1 c. (115 g.) confectioners’ sugar
  • 2 oz. cream cheese
  • 2 tbsp. whole milk



Pretzel Bites

  • In a medium bowl or liquid measuring cup, stir granulated sugar and 3/4 cup warm water (between 110° and 115°) until sugar is dissolved. Sprinkle yeast over. Let sit until yeast begins to foam and bubble, about 5 minutes.
  • In a large bowl, whisk flour and 3/4 teaspoon salt to combine. Scrape yeast mixture into dry ingredients and stir until a shaggy dough forms. Scrape dough onto a clean work surface and knead until dough is smooth, about 5 minutes.
  • Spray another large bowl with cooking spray. Place dough in bowl, cover with plastic, and let sit in a warm spot until doubled in size, 1 hour to 1 hour and 30 minutes.
  • Preheat oven to 450°. Line a baking sheet with parchment and spray with cooking spray. On a lightly floured surface, divide dough into 4 pieces. Working one at a time and keeping the other pieces covered with plastic, roll dough into a 12″-long rope, 1/2″ to 3/4″ thick. Cut rope into 1″-wide nuggets. Gently roll each nugget on work surface to even out the shape. Arrange on prepared sheet. Repeat with remaining dough.
  • Bring a large pot of water to a boil. Stir in baking soda and return to a boil. Cook nuggets, tossing a few times, until light golden brown and just cooked through, about 30 seconds. Using a slotted spoon or spider, scoop out nuggets, leaving excess water in pot, and return to baking sheet.
  • Bake pretzel nuggets until deep golden brown, 12 to 15 minutes


Cream Cheese Frosting & Assembly

  • Pour butter into a large bowl. In a medium bowl, whisk granulated sugar, cinnamon, and a large pinch of salt until combined. In another medium bowl, whisk confectioners’ sugar, cream cheese, and milk until smooth.
  • Immediately transfer pretzels to butter and toss to combine. Working in batches, toss butter-coated pretzels in cinnamon sugar until coated.
  • Arrange pretzels on a platter. Serve warm with frosting alongside.



Recipe adapted from Delish.comii

Travel Tip of the Week

This Is the No. 1 Family Beach Vacation Spot in the U.S.


If your idea of a perfect summer involves soaking up warm sunrays and splashing in refreshing waves, America’s coastlines are brimming with delightful seaside towns just waiting to be discovered. U.S. News and World Report recently analyzed destinations across the U.S., considering factors like safe waters, kid-friendly attractions, restaurants, accommodations, and prices to determine the best family beach vacations in the U.S.

While Alabama might not be the obvious choice for a beach vacation, Gulf Shores claims the top spot, with 32 miles of pristine white sands. Whether you’re seeking a taste of history at Fort Morgan, exhilarating thrills at Waterville USA, or peaceful hikes at Gulf State Park, there’s something to keep every family member engaged. Stay at the Beach Club Resort, an 86-acre village-style property offering beachfront condos, lakeside cottages, and an array of amenities, including two pools, five dining options, an arcade, and a playground.

Outer Banks, North Carolina, is second on the list, a premier surfing destination on the East Coast. This idyllic cluster of barrier islands is home to the wild horses of Corolla, five historic lighthouses, and the iconic Wright Brothers Memorial in Kitty Hawk, where the world’s first powered flight took place. While there are several luxury properties like Sanderling Resort, renting a vacation house near the beach is also an excellent option, especially for large families. 

Anna Maria Island in Florida takes third place, with seven miles of glistening beaches, mesmerizing sunsets, and various family-friendly activities ranging from interacting with marine life at the Mote Marine Laboratory & Aquarium to painting sand dollars at Shiny Fish Emporium. Of course, seafood is a must when visiting the island and the nearby Cortez Historic Fishing Village, with local spots like Anna Maria Oyster Bar, Tide Tables, and Sandbar Seafood & Spirits serving fresh catches daily. Exploring the island has never been easier, thanks to a free trolley system and a new ferry service that links the island to downtown Bradenton’s Riverwalk.

Ranked fourth is Kiawah Island, South Carolina, which is home to the luxurious Kiawah Island Golf Resort. With a vast portion of its land designated as protected habitat, this Lowcountry hideaway south of Charleston invites visitors to revel in a slower pace of life and reconnect with nature. The best way to see the island is to hop on a bike and pedal along its 30-mile network of paths, including Kiawah Beachwalker Park, the island’s only public beach.

Destin, Florida, rounds out the top five family beach destinations. Alongside its sister city, Fort Walton Beach, this jewel of a town is renowned for its crystal-clear emerald waters and sugar-like sands. Kids will love taking a dolphin cruise with companies like Smile and Wave Adventures, learning about marine animals at Gulfarium Marine Adventure Park, and visiting Gator Beach, where they can safely interact with alligators. As for dining and accommodations, options are numerous, with kid-approved restaurants like Rockin’ Tacos, Harbor Docks, and Lulu’s and cozy beach resorts like Henderson Beach Resort and Beal House Fort Walton Beach.

Tip adapted from travelandleisure.comiii 

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Factor-Based Investing – The Value Premium

Value Premium: Value Unlocked: Maximizing Returns through Factor Investing


Ballentine Capital Advisors is a registered investment adviser. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.

Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.

This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.

No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.

Advisory services through Ballentine Capital Advisors, Inc.


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