May

11

Recent performance of growth over value double 11% versus 5% last 10 years [source ] but why? Previously not the case russell growth versus russell value.

anonymous writes: 

I think it's due to where you pick the starting point out and perhaps the monetary environment. You may reach a different conclusion if you start the study in 1998 through 2008. 


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  1. John Carroll on May 18, 2017 8:11 am

    I believe that a significant part of the outperformance of growth over value is related to massive inflows to index funds. The vast majority of the public investing with define contribution plans use index funds. There is a constant supply of new money into those plans. The market cap weighted S&P 500 dominates the index funds and hence the bigger market cap growth stocks get a disproportionate share of the incoming funds further widening the gap between large market cap growth stocks and smaller value stocks. Hedge funds know this and have piled into these large market cap stocks also hence making the concentration of these stocks dominating the index worse.

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