Value Stocks at 35% Discount to Growth

The iShares Russell 2000 Growth ETF has kept pace with the S&P 500 since the 2009 lows, rallying +314% from the depths of the financial crisis a decade ago. The same cannot be said for the Russell 2000 Value ETF, which has managed a gain of 'just' 235% over the same period. While the Value and Growth ETF's briefly traded on a 1:1 basis in 2008, the Russell 2000 Value ETF has underperformed its Growth counterpart since and now trades a a 35% discount to higher growth companies. In a bear market, correlations tend to move to one and everything goes down together. While I am more interested in delivering absolute returns than relative returns at Secure Investments, it is worth noting that investors may find shelter in the Value stock universe on a relative basis during the next bear market. 

 
 

Financial stocks tend to dominate Value benchmarks and IWN currently holds a 31% weighting to this sector. Industrial stocks are the second highest weighting in the Value ETF at 12%. In the Growth ETF, technology and healthcare combined represent over 50% on the Index. 

At Secure Investments, I advise individual clients on their pension and non-pension fund investment portfolios. To learn more about my Active Asset Allocator and Gold Trader  investment strategies, please get in touch at brian@secureinvestments.ie or 086 821 5911. If you are reading this via LinkedIn, why not visit Secure Investments and subscribe to get exclusive content for free. No spam, ever. Just great stuff.

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