TIME FOR VALUE TO SHINE?
When will value have its day in the sun? The growth style’s historic run of
outperformance has continued this year, despite the emergence of several drivers
that have traditionally served as catalysts for value stock outperformance. Generally,
value stocks benefit from an economic growth tailwind, whereas growth stocks
tend to be more in favor when the growth potential they offer is scarce. Year to
date, the Russell 1000 Growth Index has returned 9.5%, compared with just 0.5%
for the Russell 1000 Value Index. Over the past 10 years, including the 2008–09
financial crisis, large cap growth stocks have outperformed value stocks by about
80 percentage points [Figure 1]. Based on the longest available data series*, the
current growth stock rally is actually the longest ever. So as summer approaches,
we ask: When will value finally have its day in the sun and start to shine?
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