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Believe It or Not, There Is a Growth/Value Cycle

Fourth Quarter 2020 
By Adam Berger, CFA

A historical look at the growth/value cycle.

From our sub-adviser, Wellington Management
Adam Berger, CFA
Multi-Asset Strategist

 

I was recently asked, “How can you be confident that value investing will work again when the historical results look so skewed to growth?” It’s a fair question. Looking at the Russell 1000 Growth and Value Indices, growth is ahead on a 1-, 3-, 5-, 10-, and 30-year basis, and, indeed, since 1978 when data is first available. Among the most striking results are the 1-year returns (37.5% for growth and -5.0% for value) and the 10-year annualized returns (17.3% for growth and 9.9% for value).1



1 Sources: Russell, Datastream, Fama/French data library, Wellington Management. Based on total returns as of September 2020. Past performance does not guarantee future results. Investments cannot be made directly into an index. 

Important Risks: Investing involves risk, including the possible loss of principal. Security prices fluctuate in value depending on general market and economic conditions and the prospects of individual companies. • Different investment styles may go in and out favor, which may cause underperformance to the broader stock market.

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