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Additional Perspective On Value vs Growth

by: Lawrence Hamtil     

Last year, I discussed why I thought the narrative about value lagging growth was overdone, if not misguided.  As a follow-up to that post, I wanted to provide some additional data, which I believe lend perspective to this discussion.  

In the table below are the trailing annualized returns for the Russell 1000 Index, the Russell 1000 Value and Growth indices, and the Value and Growth index returns for the available Russell 1000 sector indices:

While the flagship Russell 1000 Value index has lagged both its growth counterpart and the standard Russell 1000 Index over every period going back to July 2001 (the earliest common starting point for all the indices), value has had far better success in other areas.  For example, the Russell 1000 Value Energy index has outperformed the Russell 1000 Growth Energy portfolio over every period observed.  Similarly, value has enjoyed superior performance in utilities over every period but the most recent 12-month period.  

Perhaps most interestingly is the performance of technology shares.  Value has outperformed growth in the sector over the last seventeen years, but has trailed over technology growth over the last decade.  Even so, value technology investors should not complain; after all, value technology stocks have outperformed the Russell 1000 and the Russell 1000 Growth indices over every period save the last year.  This suggests to me that factors that drive overall sector performance should not be discounted when it comes to analyzing performance of traditional growth and value portfolios.

Note - While I am a critic of the construction of the Russell Value and Growth indices, they are what is available, so they will have to do for now.

The information provided above is obtained from publicly available sources and it is believed to be reliable. However, no representation or warranty is made as to its accuracy or completeness.

Lawrence Hamtil is a fourteen-year veteran of the financial services industry, having served clients in all aspects of the business during his career, which started in 2002. In 2005, he joined Dennis Wallace of Fortune Financial Services, LLC, becoming, at the time, one of Multi-Financial Securities, Inc's youngest registered representatives. In 2008, Dennis and Lawrence made the decision to become fully independent by founding their own Registered Investment Advisory (RIA), Fortune Financial Advisors, LLC. He serves clients in the United States and Europe. His financial commentary has been referenced in Barron’s online edition.

You can connect with Lawrence on Twitter ( @lhamtil) or via email, lawrence.hamtil@fortuneadv.com.