2020 opened with growth stocks leading value. As the year has progressed, the lead has significantly increased. According to our friends at Morningstar, growth is outperforming value by the largest margin since 1999.
Why is this significant?
In general, value stocks have trailed growth HOWEVER, they tend to do better in market downturns which is not currently the case. Growth strategies have included tech and communication stocks which have fared well in these pandemic times.
In a recent article, Morningstar takes a look at the performance of value vs growth stocks over time and in response to market downturns. Historic gains by value stocks, particularly in the post-financial crisis were so great value stocks entered the current decade ahead of growth stocks.
Turning the tide
Gains in growth-oriented sectors have contributed to the change. Growth has buoyed by the tech sector, while energy, financial services and consumer defensive sectors have contributed to the decline of value.
Read more about it in the full article.