Five years after the market bottom, a surprising look at just what ‘value’ and ‘growth’ have meant.
The anniversary of the stock market’s trough in March 2009 got me wondering about how style ETFs have performed during the five-year bullish run following the collapse of Lehman Brothers.
After all, with all the talk about smart beta these days, good old value and growth investing seems largely forgotten.
Specifically, I wondered how “plain vanilla” style funds such as the iShares Russell 1000 Value ETF (IWD | A-86) and the iShares Russell 1000 Growth (IWF | A-89) have done in the past half decade. IWD and IWF remain huge and liquid, with assets of more than $20 billion in each fund.
I found two surprises.
The first was that the returns of plain-vanilla value and growth ETFs like IWD and IWF are remarkably similar since the market bottom.
In fact, their respective performances differ so little from each other, and from the broad market, that it raises the question, Why bother?
The Russell 1000 as measured by the iShares Russell 1000 ETF (IWB | A-92) was up 214 percent for the period, while the value play, IWD, and growth play, IWF, led by 1 percentage point and lagged by 2 percentage points, respectively, according to Bloomberg. In context, that’s small potatoes.
It’s the same story with S&P 500-based funds.
The iShares S&P 500 Value ETF (IVE | A-91) beat the 207 percent return of the iShares Core S&P 500 ETF (IVV | A-98) by just 4 percentage points, while the iShares S&P 500 Growth ETF (IVW | A-91) lagged by 4 percentage points.