Yet some companies offer better growth prospects for the future. As an example, he points to Imperial Tobacco and Vodafone. Both are trading at a price/earnings ratio of about 12x, but Vodafone’s earnings are likely to grow much faster in the future.Sergeant attributes this apparent anomaly to risk-aversion in the market. Growth sectors have had a hard time in recent years, and uncertainty about the future means that investors are unwilling to pay a premium for growth. His views were endorsed by Bill McQuaker, a quantitative strategist at investment bank CSFB: “One of the unusual features of the market at the moment is that the overlap between value and growth is unusually large.” The dispersion of valuations in Europe is currently at a 15-year low, according to McQuaker’s calculations. For him, the advantage of the current environment is that it is possible to buy growth stocks for the price of value companies: “In many ways, this is a world where you can have your cake and eat it.” Under normal market conditions, there is generally little overlap between growth and value stocks. Generally, value stocks are concentrated in more mature market sectors, while growth stocks are in emerging areas, such as information technology. Over the past four years, since the stockmarket peak in 2000, value stocks have generally outperformed growth. But during the technology boom of the late 1990s, growth stocks, especially those in the technology sector, did particularly well. Sergeant co-manages the SG UK Growth fund and the SG UK Special Opportunities fund. The former has risen by 13.3% over the last year against a sector average of 12.7%, according to TrustNet. The latter, which is in the same sector, has increased by 14.0%.