Value ETFs Are Gaining Momentum Against Growth Rivals

“In the last four weeks, the Russell 1000 Value Index has outperformed its growth counterpart by the largest monthly margin since September 2017, thanks in part to stumbles in Facebook and Netflix shares that stemmed from slowing user growth. Moreover, disappointing second-quarter results have reignited fears the tech giants, which have been responsible for much of the equity market’s gains this year, are becoming vulnerable,” reports Reuters.

Value investing is a popular long-term investment strategy. Value stocks have historically outperformed growth stocks, or companies with high earnings expectations, in almost every market over the long-haul. For instance, the MSCI USA Value Index has outperformed the MSCI USA Growth Index by an annualized 81 basis points since 1974 through September 2015.

“Value stocks are even more attractive on a relative basis, fund managers said. The gap between forward price-to-earnings ratios for the two categories has swelled to the widest level in the past 15 years,” according to Reuters.

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