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ETF Specialist

Shades of Growth

"Growth" is a broad description that doesn't account for meaningful differences between strategies.

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Growth investors target stocks with competitive advantages and promising outlooks, believing that these firms’ strong businesses will equate to strong long-term returns. These enviable attributes are embedded in stock prices, so these firms come at a hefty cost. However, investors willing to “buy high, sell higher” have seen their investments outperform value strategies over the past decade.

Value reigned for decades, but the tide turned in growth’s favor in the wake of the global financial crisis. From March 2009 through August 2020, the Russell 1000 Growth Index outperformed the Russell 1000 Value Index by 6.75 percentage points annually. The two indexes’ volatility has been comparable, but value has experienced steeper drawdowns during periods of turmoil. Growth dominated the 2010s, and when--or whether--value rebounds remains to be seen.

Ryan Jackson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.