Value vs Growth: Growth Still Way Ahead for 2015

Thursday night, October 22nd, is a big night for traditional Technology Growth investors with Amazon and Google (or Alphabet, or whatever they are calling themselves these days), set to report Q3 ’15 earnings. Even though Microosft remains pretty reasonably valued, many still classify it as a growth stock. (Long all three stocks.)

With the crushing in biotech continuing even today, I expected to see some of the differential between value and growth narrow since the seeming bottom in Energy, Emerging Markets, etc. in late September ’15, but at least according to this spreadsheet, that hasn’t yet happened.

FC – Value vs Growth

Bespoke updates this info weekly in the Bespoke Closer report, which is a great weekly summary of just about anything market-related.

There is client money in the JP Morgan Funds, so I get the quarterly JP Morgan, “Guide to the Markets” and 71 page summary of all things economic and capital markets related showed the following as of 9/30/15:

YTD Style Returns:

L/C Growth: -1.5%

L/C Value: -9.0%

M/C Growth: -4.1%

M/C Value: -7.7%

S/C Growth: -10.1%

S/C Value: -5.5%

Using the JPM stats, you can see the outeperformance differential for YTD, 2015 in the large-cap vs small-cap styles.

The Bespoke data referenced in the spreadsheet, uses the returns on the “style” ETF’s, for example the IVW for SP 500 Growth and IVE for the SP 500 Value.

For example, the top 3 holdings in the SP 500 Growth ETF are Apple, Microsoft and Facebook, while the top 3 holdings in the SP 500 Value ETF are Exxon, GE and Berkshire. (Long all 6 names.)

Analysis / conclusion: Style rotation matters as much as sector rotation. Growth’s very strong outperformance will get a test with Thursday night’s earnings reports.

For 2014, the difference between Growth and Value was about 700 bp’s favoring Growth.

So far this out-performance is continuing.

So may pundits have talked about the bounce in Energy and such since late September, ’15, which is true, but Growth has rallied just as much if not more so.


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