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   Asset Management - Market Characteristics
A Snapshot of Growth vs. Value Investing

 

 

 

View from the Observation Deck 


1. Today's blog post is an update of a previous one. Investors can compare today's snapshot to the one we did on 2/11/16 (click here to view).


2. Growth tends to outpace value investing when the earnings growth rates of said 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 three of the six periods. Growth investing topped value investing for the 1-, 3- and 10-year periods through 4/15/16.
 

4. The returns were as follows (Pure Value vs. Pure Growth): 15-yr. average annualized (10.06% vs. 7.63%); 10-yr. average annualized (8.13% vs. 9.93%); 5-yr. average annualized (12.79% vs. 12.76%); 3-yr. average annualized (12.81% vs. 14.87%); 1-yr. (-6.36% vs. -3.81%) and Y-T-D (4.15% vs. -0.50%).


5. The Large Value and Large Growth fund categories tracked by Morningstar, which include both open-end mutual funds and ETFs, reported net outflows totaling $100.00 million and $15.27 billion, respectively, in Q1'16, according to its own release.

 

www.ftportfolios.com

 

 

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

 

First Trust Advisors L. P., April 19, 2016-Bob Carey, Chief Market Strategist

19.04.2016