In retrospect it is clear that Value as an approach was over-owned back in 2006; it had had such a great run post the TMT bubble that it had become popular and was also supported by the large amount of money going into Private Equity, which itself tended to be Value led. The removal of this excess popularity and liquidity explained the poor performance of Value in 2007.
However, the subsequent underperformance of Value can only be explained by one word, and that is FEAR. The credit crunch and European Sovereign Debt Crisis made investors buy short-term certainty, and sell medium-term opportunity. In other words the type of equity investments that have been wanted have been those with perceived "safety today" (regardless of how high the price) and the shares to be avoided have been those with high medium-term potential but short-term risks (regardless of how low the price).
As a result, the premium paid for low risk today has become generationally high, as shown in the graph.