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  A Snapshot of Growth vs. Value Investing
Posted Under: Themes
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View from the Observation Deck 

  1. Today's blog post is an update of one we do on an ongoing basis. Investors can compare today's snapshot to the one we did on 4/19/16 (click here to view).
  2. Growth tends to outpace value investing when the earnings growth rates of companies accelerate faster than the broader market, such as right after the economy exits a recession. Growth has slowed of late.
  3. In today's chart, the S&P 500 Pure Growth Index outperformed its value counterpart in two of the six periods. Growth investing topped value investing for the 3- and 10-year periods through 8/9/16.
  4. The returns were as follows (Pure Value vs. Pure Growth): 15-yr. average annualized (9.76% vs. 8.12%); 10-yr. average annualized (8.51% vs. 11.28%); 5-yr. average annualized (17.78% vs. 16.59%); 3-yr. average annualized (8.76% vs. 12.31%); 1-yr.  (4.15% vs. 3.36%) and Y-T-D (9.17% vs. 5.56%).
  5. The Large Value and Large Growth fund categories tracked by Morningstar, which include both open-end mutual funds and exchange-traded funds, reported estimated net outflows totaling $4.76 billion and $48.23 billion, respectively, in the first half of 2016, according to its own release. Large Blend funds and ETFs, however, reported estimated net inflows totaling $35.28 billion over the same period, an indication that many investors may not favor one style over the other, in our opinion.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Pure Growth Index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest growth characteristics based on three factors: sales growth, the ratio of earnings change to price, and momentum. It includes only those components of the parent index that exhibit strong growth characteristics, and weights them by growth score. Constituents are drawn from the S&P 500 Index. The S&P 500 Pure Value Index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest value characteristics based on three factors: the ratios of book value, earnings, and sales to price. It includes only those components of the parent index that exhibit strong value characteristics, and weights them by value score. Constituents are drawn from the S&P 500 Index. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance.

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Posted on Thursday, August 11, 2016 @ 9:42 AM • Post Link Share: 
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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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