Taking a look at large-cap growth and value exchange traded funds (ETFs), it does not appear that growth has started to outperform value, despite predictions. Growth stocks have been lagging value stocks for more than five years and Michael Krause for Seeking Alpha writes he has a "dirty little secret".
Krause exams the ETFs and finds the stocks in the iShares S&P 500 Growth (IVW) don’t actually grow earnings faster than stocks in the iShares S&P 500 Value (IVE). Actually, they’re just more expensive. Between 2002-2007 stocks in IVW have grown earnings at an compound annual rate of 14.6% versus the same rate of 14.5% for stocks in IVE.
The growth stocks in IVW trade at a higher P/E multiple, 17.5, than in IVE, 15.0. He points out that one would not get faster growth with high valuation on IVW, you would just be paying more for the higher valuation.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.