Historically speaking, it could be a great time to own value stocks. From 1980 to 2006, value outperformed growth by an average of 2% (as measured by the Russell 1000 Growth versus Russell 1000 Value Index) to 5% (as measured by the Russell 2000 Growth versus Russell 2000 Value Index) per year.
However, over the last 10 years since the global recession of 2007, value-oriented strategies have underperformed growth strategies by an average of 3% per year, according to Gotham Funds. The only exception was in 2016 in which value substantially outperformed growth.
As the eight-year bull market roars on, it might be a good time to take another look at value stocks for the long-term. As Gotham Funds observes, “We do not think this trend can persist; stocks represent ownership shares in a business and we believe that markets will revert back to reflect underlying company fundamentals.”
For decades, small-cap value stocks quietly outperformed their flashier and brand named large-cap growth stock counterparts. It might be time for value stocks to once again take their place in the spotlight of a savvy long-term investment portfolio.
For more information on value versus growth investing, contact TideRock Financial CEO Simon Reeves at simon@tiderockfinancial.com.
