From Classic Discipline to AI Precision: The New Era of Value Investing

Introduction

Innovation may dominate headlines, but in 2025, value investing is staging a quiet but compelling comeback—this time learning lessons from its own past. Traditional metrics like low price‑to‑book and dividend yield have resurfaced as strong signals in an era of lofty valuations and elevated macro risk. However, the modern revival isn’t about nostalgia—it’s about blending classic discipline with fresh tools: AI‑enabled screening, global diversification, and factor layering.

At Zynergy, this modern twist underpins our partnership philosophy: rooting in value, enhanced by technology, and amplified via active private markets.

The Revival: Why Now, and What’s Different

Recent market trends point to a notable returning strength in value investing—not simply as nostalgia, but as a recalibrated investment mode with fresh tools and broader scope.

1. Fund Flows Are Shifting Toward Value

In early 2025, Lipper data cited by Reuters shows that while U.S. growth ETFs experienced approximately $3.6 billion in outflows, U.S. value ETFs recorded $1.8 billion in inflows—a clear directional signal as investors sought yield and stability. Simultaneously, a MarketWatch report highlights that while growth ETFs may have attracted more overall inflows year-to-date, value strategies still secured meaningful capital, reflecting renewed confidence in undervalued names.

2. International Value Leading the Charge

A defining development in 2025 has been the outperformance of international value stocks. MSCI research corroborates this; MSCI reports that non-U.S. equities outperformed U.S. stocks by nearly double digits, signaling a global rotation into value. According to Yahoo Finance, Bank of America’s fund manager survey reveals that 39% of European asset managers now hold an overweight position in European equities, leading to inflows into both regionally-focused and value-heavy strategies.

3. Macro Conditions Favoring a Rotation

Morgan Stanley’s mid‑year outlook notes a notable pivot in U.S. investment sentiment. With a newly confirmed U.S.–EU trade agreement calming tariff fears—and anticipation of Fed policy easing—capital is rotating into cyclical and value sectors such as industrials, financials, and healthcare. 

Meanwhile, J.P. Morgan’s factor view emphasizes that equity value factors globally offered diversifying returns in early 2025, especially amid macro uncertainty. European and Japanese value factors were top performers in the factor stack, even as U.S. markets remained elevated.

“We maintain our positive outlook for factors, with the equity value factor appearing attractive across the globe.”

4. Why This Time Is Different

• AI-driven concentration in mega-cap names has created a valuation gap rarely seen in decades. Rising interest in undervalued small/mid-caps and non-U.S. equities reflects backlash against consensus growth. 
• Global macro divergence—Europe’s fiscal stimulus and China’s reopening—support earnings revisions abroad while U.S. equity valuations remain high. 
• Factor-based systems and quant engines now allow active allocators to screen price, quality, momentum, and macro signals simultaneously—making value identification far more precise than simple screens. 

Taken together, these developments mark not merely a cyclical bounce for value, but a structural recalibration: value investing now incorporates global breadth, macro-aware timing, and disciplined factor overlay.

Value’s resurgence is also tied to structural market fatigue. According to The Wealth Advisor, Bill Smead, founder of Smead Capital Management, warns of a multi-year bear cycle driven by overheating valuations and persistent inflation. Having kept Smead Capital Fund’s portfolio heavy in value names, the manager now argues that a value-first strategy is best suited to endure elevated market risk

Value Investing—Then vs Now: The Modern Twist

Classic Focus: The book Security Analysis by Benjamin Graham and David Dodd notes that value investing traditionally favored deeply discounted, stable businesses with margin of safety. Bill Miller, Seth Klarman, and Warren Buffett refined it, introducing nuanced judgment on value and quality.

Graham and Dodd both recognized, 

“Things happen too fast in the economic world to permit the authors to rest comfortably for long.”

Modern Enhancements:

1. AI‑enabled valuation engines—systems like the DBOT AI model emulate expert valuation frameworks and make recommendations for long-term investing by reasoning similar to an established human valuation expert. 
2. Factor diversification—as Bill Miller emphasizes, “Growth doesn’t always create value. A company can grow, but if it doesn’t earn above the cost of capital, that growth destroys value.”  
3. Global reach—today’s value strategy incorporates international value stocks. 
4. Active, private placements—investors move into off‑index private deals in credit, real estate, and operational turnarounds, where value multiples still exist. 

A S&P Global analysis confirms that historical volatility favors value performance—periods of market stress or profit doom often benefit cyclicals, defensives, and financial value plays.

Real-World Illustrations: Value with Modern Tools

European Small‑Cap Value Surge
The Neuberger Berman Equity Market Outlook displays the MSCI Europe Small Cap Value Index advanced nearly 25% in mid‑2025 as investors sought yield and discounted cyclicals. The weaker dollar bolstered returns, benefiting non-U.S. markets. 

UK’s Value-led Mid‑Cap Rally
The FTSE 100, shown in The Guardian, indexes surged over 10% YTD in USD terms.

Ben Russon, co-head of UK equities, suggests 

“With the pound holding steady and UK equities looking attractively priced vs global peers, private equity is ramping up deal activity and targeting undervalued mid-sized companies ready to benefit from the UK’s coming upswing.”

U.S. Value Picks in Focus
Among individual investors, stocks like EOG Resources, Williams Companies, and Verizon Communications are favored for their strong fundamentals and dividend yield—according to Wall Street Journal analysis via CNBC.

Integrating Value into Zynergy’s Modern Platform

Zynergy’s strategy overlays three pillars:

1. Data‑driven value screening using AI to analyze price multiples, cash flow yield, and sector cycles—running thousands of factor scenarios. 
2. Global value exposure—including U.S. cyclical and dividend plays, European and UK small/mid caps, and select EM value. 
3. Private value vehicles—structured credits or GP‑led secondaries where capital is deployed at discounts to intrinsic net asset values. 

This approach marries bottom‑up stock selection with private value capture and alignment via structured carry, waterfall hurdles, and operational oversight.

Actionable Takeaways for Investors and Allocators

• Blend style with discipline: Add exposure to value-oriented names within dynamic, factor-driven portfolio frameworks. 
• Diversify beyond domestic: Europe, UK, and Asia offer value opportunities undervalued due to U.S. tech dominance and a strong dollar. 
• Use AI tools as validators: Platforms like DBOT validate whether fundamentals support value signals across sectors. 
• Seek private value entry points: Private secondaries and direct credit can offer consistent value that public volatility misses. 
• Leverage governance and alignment: Use structured waterfall terms and performance KPIs to ensure alignment with underlying value realisation. 

Risks to Consider

• Value and growth are not always correlated. As Bill Biller highlights, if a company is earning above its cost of capital, free cash flow yield plus growth is a good proxy for expected annual return. Growth is a guidepost, not the end-all-be-all.  
• Style drift and overlapping factor exposures in passive indices dilute true value signals. 
• Value recovery may lag in the U.S.; Europe and Asia are ahead. U.S. value may underperform unless macro catalysts unfold. 
• Rising rates, inflation surprises or renewed AI enthusiasm could undercut cyclical recovery if growth confidence returns. 

Conclusion & Call to Action

Value investing hasn’t returned to the 1970s—but it is back with an upgrade. The market’s premium valuations, increased macro volatility, and global divergences make disciplined, active value a compelling anchor for modern portfolios.

At Zynergy, our capital deployment blends traditional value principles with AI validation, global dispersion, and structured private investment vehicles. If you’re an allocator or entrepreneur seeking margin-of-safety opportunities refined by conviction and enhanced by modern tools, we invite you to learn more about how Zynergy can bring value investing into the 21st century with precision and performance.

Visit zynergy.com to explore our approach to modern value investing.

Sources

• Reuters – US investors seek refuge in value funds 
• MarketWatch – Value stocks outperform this quarter 
• MSCI – 2025’s Historic Equity Shift 
• Yahoo Finance: Investors flock to Europe as US exceptionalism fades
• MarketWatch – Where Morgan Stanley is looking for value
• J.P. Morgan Factor Views 2Q 2025 
• The Wealth Advisor: Smead Sounds Alarm on Equity Market’s Latest Surge
• Security Analysis by Benjamin Graham and David Dodd 
• Arxiv – DBOT: AI for Systematic Long-Term Investing 
• Macro Ops – Bill Miller’s Value Investing Strategy
• S&P Global Analysis – Valuation and Volatility Factors 
• Neuberger Berman Equity Market Outlook
• The Guardian – FTSE100 breaks 9,000 point barrier
• CNBC – Top Wall Street analysts recommend these dividend stocks
• Zynergy