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Bob Carey
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  Snapshot of U.S. Equity Styles/Market Caps
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View from the Observation Deck

  1. Today's blog post is intended to expose potential opportunities within the growth and value styles of investing, as well as by market capitalization (market cap). Today's post updates the one we did on 4/12/16 (click here to view).
  2. At any given time, the equities markets are likely being led up or down by at least one of the three market cap classifications (large-cap, mid-cap or small-cap). Often this leadership role can be held for a multi-year period.
  3. From 1995-1999, large-cap stocks outperformed their mid- and small-cap counterparts, as measured by the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices, by a sizable margin. From 2000-2012, mid- and small-caps outperformed large-caps by an even bigger margin.
  4. From 12/31/12 through 6/7/16, the S&P 500 Index slightly outperformed its two counterparts. The S&P 500, S&P MidCap 400 and the S&P SmallCap 600 indices posted cumulative total returns of 59.2%, 56.8% and 58.0%, respectively.
  5. Year-to-date through 6/7/16, value stocks held the edge, with the S&P MidCap 400 Value Index as the top performer. Growth stocks outperformed value stocks in each of the three respective market caps in 2015.
  6. With respect to earnings growth rate estimates, growth stocks have a significant edge in 2016, but the prospects for value stocks look a bit better in 2017 (see chart).
  7. Five of the six indices have 2016 and 2017 estimated P/E ratios below their respective three-year averages as of 6/8/16. The only one that does not is the S&P 500 Value Index.


    This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. There can be no assurance that any of the projections cited will occur. The S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices are capitalization-weighted indices designed to measure large-capitalization, mid-capitalization and small-capitalization U.S. stock market performance. The Growth and Value sub-indices of the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices are designed to measure the performance of growth stocks and value stocks, respectively, within the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices.

    To Download a PDF of this post, please click here.
Posted on Thursday, June 9, 2016 @ 11:03 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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