Investment managers who adopt a value style of investing experience less volatility in investment returns, than those who use growth style investing methods, according to Treasury Group affiliated firm Global Value Investors (GVI).

"There is no doubt that if you are in the sex and violence part of the market [growth stocks] you have higher volatility compared to the value end of the market," GVI director Grant Cullens said yesterday. "Being in some of the value orientated income stocks undoubtedly leads to lower volatility in terms of return."

Value style investors generally buy stocks that seem to be underpriced when analysing a company's fundamentals, including price-to-earnings or price-to-book ratios, while growth style investors look for companies that show signs of above-average growth, even if their share price appears expensive.

"The market inevitably goes through cyclical phases and as such you get periods where value stocks perform and where growth stocks perform. At the moment, we would argue that we are probably more in a value phase," Cullens said.

He also argued that those companies that pay their investors dividends seemed to do better.

"If you look at the performance of the S&P year to date for example you will see that dividend paying companies will actually outperform the market, while non-dividend paying companies are underperforming the market," he said.

"There is no doubt there is some demarcation going on," he said.