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Bob Carey
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  A Snapshot of Growth vs. Value Investing
Posted Under: Themes

 
View from the Observation Deck  
  1. We update this post every few months so that investors can see which of the two styles (growth or value) are delivering the better results. 
  2. The S&P 500 Index reached an all-time high closing of 3,699.12 on 12/4/20, according to Bloomberg.
  3. The S&P 500 Pure Growth Index significantly outperformed its value counterpart in all six periods featured in the chart. Growth stocks have held up exceptionally well year-to-date, which has been shaped by the COVID-19 pandemic.
  4. The total returns through 12/4/20 were as follows (Pure Growth vs. Pure Value): 15-year avg. annual (11.92% vs. 7.92%); 10-year avg. annual (15.03% vs. 11.25%); 5-year avg. annual (15.09% vs. 6.70%); 3-year avg. annual (16.52% vs. 1.14%); 1-year (31.20% vs. -3.74%); and year-to-date (27.07% vs. -7.52%).
  5. As of 11/30/20, the largest sector weighting in the S&P 500 Pure Growth Index was Information Technology at 40.4%, according to S&P Dow Jones Indices. The largest sector weighting in the S&P 500 Pure Value Index was Financials at 33.9%.
  6. From 12/31/19 through 12/4/20, the S&P 500 Information Technology Index posted a total return of 38.98%, compared to -3.89% for the S&P 500 Financials Index, according to Bloomberg. The S&P 500 Index was up 16.50% over the same period.
  7. While it does not show up in the chart above, value stocks have experienced a strong rally since our last blog post on this topic a little over a month ago. Click here to visit that post. From 10/26/20 through 12/4/20, the S&P Pure Value Index posted a total return of 21.15%, compared to 10.56% for the S&P 500 Pure Growth Index, according to Bloomberg.  

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 Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. 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.

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Posted on Tuesday, December 8, 2020 @ 1:00 PM • 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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