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Value About To Outperform Growth

Gary Stringer

This article is part of a regular series of thought leadership pieces from some of the more influential ETF strategists in the money management industry. Today’s article features Gary Stringer, president and chief investment officer of Memphis, Tennessee-based Stringer Asser Management.

The global economy is likely to continue advancing for years, which will create a constructive atmosphere for equity investors.

Collectively, the signals we monitor suggest that the risk of a U.S. recession is still a few years out. A growing economy increases the potential for corporate revenue and earnings growth. As a result, and despite periods of volatility, we expect equity prices to continue marching higher.

 

 

Look For Laggards

We think investors should look to emphasize investments in the areas of the equity markets that have not kept pace with some of the hotter sectors.

As the domestic equity market has appreciated this year, performance has been led by companies in the traditional growth style sectors, such as information technology. The value style has lagged, which results in interesting price dispersions that can create opportunities for investors.

 

 

Given the sheer magnitude of the growth style outperformance, we think the time for a change of stock market leadership, favoring traditional value style sectors, is upon us.

 

The growth style of investing rarely outperforms the value style to the extent that we have recently seen. We think there is a strong probability that the value style will outperform over the next 12 months.

 

 

Value ETF Options

Investors looking to add dedicated value exposure have many options available to them.

Some options include the SPDR S&P 500 Value ETF (SPYV), the Vanguard Value ETF (VTV) and the First Trust Multi Cap Value AlphaDEX Fund (FAB), among others.

 

SPYV, VTV, FAB Year-To-Date Returns 

 

At the time of writing, Stringer Asset Management held VTV among its universe of ETFs included in its suite of ETF Portfolios. Stringer Asset Management is a Memphis, Tennessee third-party investment manager and ETF strategist. Contact Stringer Asset Management at 901-800-2956 or at info@stringeram.com. For a complete list of relevant disclosures, please click here.

S&P 500 Index – This index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of a broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

Russell 3000 Growth – This index is a market-capitalization-weighted index based on the Russell 3000 Index. The Russell 3000 Growth Index includes companies that display signs of above-average growth. The index is used to provide a gauge of the performance of U.S. growth stocks.

Russell 3000 Value – This index is a market-capitalization-weighted index based on the Russell 3000 Index. The Russell 3000 Value Index includes companies that display lower price-to-book ratios and lower expected growth rates.

 

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