Value—it’s the Real Thing

For style-neutral investors, the debate between value and growth may feel a little like being a water drinker watching the cola wars unfold—a mildly entertaining distraction with little real consequence. But a look at the last 15 years shows style leadership and the gap in performance may serve as an indicator of market direction for investors of all stripes.

As shown by the black line, when growth outperforms value by a significant margin, performance for the broader market (blue dashed line) has often stumbled during the following six months. Conversely, when value has led, forward returns for the broad index have benefited—such as in the first half of 2010 and late 2016.

S&P 500 Growth - Value
Heartland Advisors Value Investing Market Insight value vs growth chart
Source: © 2018 The Leuthold Group and Standard & Poor's, 12/27/2002 to 12/29/2017
Return Spread in chart is represented by the difference in 1-year total return between the S&P 500 Growth Index and S&P 500 Value Index. All indices are unmanaged. It is not possible to invest directly in an index. Economic predictions are based on estimates and are subject to change.
Past performance does not guarantee future results.
 
While current data suggests solid economic growth in the months ahead, we would be more comfortable with the direction of the market if value was to once again rebound versus growth.

 

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Author

Heartland Advisors Value Investing Portfolio Manager Will Nasgovitz

Will Nasgovitz

Nasgovitz is CEO and Portfolio Manager of the Select Value and Mid Cap Value Funds and their corresponding separately managed account strategies. He also is CEO of Heartland Funds. He has 18 years of industry experience, 14 at Heartland.

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Past performance does not guarantee future results.

Investing involves risk, including the potential loss of principal.

There is no guarantee that a particular investment strategy will be successful.

Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.

The statements and opinions expressed in the articles or appearances are those of the presenter. Any discussion of investments and investment strategies represents the presenters' views as of the date created and are subject to change without notice. The opinions expressed are for general information only and are not intended to provide specific advice or recommendations for any individual. Any forecasts may not prove to be true.

Economic predictions are based on estimates and are subject to change.

Growth and value investing each have unique risks and potential for rewards and may not be suitable for all investors. A growth investing strategy emphasizes capital appreciation and typically carries a higher risk of loss and potential reward than a value investing strategy; a value investing strategy emphasizes investments in companies believed to be undervalued.

Heartland’s investing glossary provides definitions for several terms used on this page.

ALPS Distributors, Inc., is not affiliated with Heartland Advisors.

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