Make room for ‘value’ in your ETF portfolio

Article Excerpt

Value investing is one of several investment styles that have over time performed better than the overall market. Other long-term styles with strong track records include small companies, low volatility stocks, and high-quality companies. The problem for you as an investor is that the winning styles vary over time. As we highlighted in our October 2018 issue, value stock investors globally have enjoyed a superior long-term performance. The MSCI World Value Index has outperformed the MSCI World Growth Index by 2.1% per year since 1975 (the start of both indexes). Remarkably, the value index has also had lower volatility (risk) than the growth index. Nonetheless, in the U.S., large companies, momentum stocks, and growth stocks have performed better than the overall market for the past 10-, 5- and 3-year periods (see table below). Value is making a comeback with investors Recently, U.S. “value stocks” have started to outperform growth stocks. The graph at the top of the next column shows the performance of the Vanguard…

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