Pure Style ETFs Win In 5-Year Run

March 21, 2014

IVE IVW IVV

My point is that the similarity of returns for the period undercuts—or at least raises questions about—the validity of broad-based style investing.

There’s more differentiation when looking at other time periods. But in the context of the remarkable bull market of the past five years, making a style bet wasn’t making much of a bet at all.

The Pure Play

The second surprise was in the magnitude of the performance difference of pure style funds.

To back up, not all style bets are created equal.

Funds like IWD and IWF split the market in half—half value and half growth—so they hold stocks in the middle of the style spectrum too.

In contrast, pure style funds split the style continuum in thirds, so they exclude the stocks at the “core” of the style spectrum. (Please note that the “core” in IVV’s name is unrelated to this concept.)

The effect on performance that this methodology has is nothing short of massive.

For the same five-year period since the market trough in March 2009, the Guggenheim S&P 500 Pure Growth ETF (RPG | A-58) returned 323 percent (versus IVV’s 207 percent) and the Guggenheim S&P 500 Pure Value ETF (RPV | A-65) netted a whopping 517 percent.

 

 

Find your next ETF

Reset All