The technology sector, for one, is an area not typically considered value.
Portfolios at deep-value equity shop Harris Associates, manager of the Oakmark Funds, are full of stocks that would have a typical value investor scratching his or her head.
As investors have plowed into classic value stocks such as consumer staples and health care in search of yield, Oakmark's funds have shifted toward, gulp, your grandfather's growth stocks, i.e., companies with high retained earnings.
"Our portfolios are full of the names we spent our careers rooting against," said Win Murray, director of U.S. equity research and co-manager of the $4.2 billion Oakmark Select Fund (OAKLX).
It isn't Oakmark that has changed, though. It is the market.
"We've always valued growth, just not as much as the market has," Mr. Murray said.
"It's not that we've started valuing it more. It's just that the market has started valuing it less," he said.
Equity income mutual funds, for example, had net inflows of $8.2 billion year-to-date through Sept. 30, the most of any U.S. mutual fund category, according to Lipper Inc.
It is certainly not a new phenomenon.
Equity income mutual funds have led inflow statistics in the domestic-equity-fund category every year since 2009. All that money coming into the old-school value pool has pushed up valuations to the point where Oakmark had to look elsewhere.
"The opportunity's not there," Mr. Murray said.
So technology has become a particular area of interest for the firm. The Oakmark Select Fund has a 24% weighting to technology, and the flagship $11 billion Oakmark Fund (OAKMX) has a 19% weighting.
"We have more tech in our portfolios now than we have had in our entire careers," Mr. Murray said.
When selecting companies, he said that he doesn't get too caught up in value or growth labels.
"It's a fake distinction," Mr. Murray said. "The real opposite of value is momentum."
