Style-Box Update: Value May be Just Starting to Outperform

Updating style-box returns as of 3/31/22, using the iShares growth and value ETF’s, “value” continues to outperform growth this calendar year (probably not a surprise given the Energy sector’s performance) but growth did narrow the differential after the February 15, update.

Near the SP 500 lows of early March and just prior to the start of the nice March rally, SP 500 growth was down 12%, while value was down 2% and I suspect that was the peak of the performance differential. By 3/31/22, the SPYG (SPDR Growth ETF ) was down 8.48%, while the SPYV was down just 15 basis points or almost flat at the end of the quarter.

Looking at the above spreadsheet (and like all my spreadsheets, this one is taking on a life of it’s own) readers can see how in the mid-cap and small-cap asset classes, value started to outperform growth in 2021, but the large-cap growth asset class continued to show outperformance vs large-cap value, and that is mostly due to the mega-cap space or top 10 names in the SP 500.

Starting in 2022 though, value has clearly outperformed across all market-cap asset classes.

Q1 ’22 was the biggest performance differential between large-cap value and growth since 2016, with large-cap value outperforming l/c growth by over 800 bp’s this quarter.

The rolling multi-year returns are still pretty elevated. If 2022 gives us nothing more than a flat equity market across the board, it would go a long way in taking the steam out of the all market caps. Looking at the rolling returns, large-cap growth is still showing much healthier average, annual returns than it’s smaller asset classes.

Numbers and markets change quickly. Take all this with a healthy skepticism. I do this update just to stay abreast of the numbers and rolling returns in areas where clients may not be invested.

The weekly earnings update will come later this weekend.

Thanks for reading.




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