Despite a long run of underperformance, the time may be at hand for value stocks to overtake growth stocks and reclaim market leadership. Over the last three years alone, the iShares Russell 1000 Growth ETF (NYSEMKT:IWF) has soared at a 21% annualized clip, while the iShares Russell 1000 Value ETF (NYSEMKT:IWD) has risen only 2.5% each year. That gap has grown even wider in 2020, with large cap growth stocks outperforming their value counterparts by 32 percentage points, while small cap growth has beaten small value by nearly 25 percentage points.
As an investor, you need to determine why growth has beaten value, and whether the tide will turn.
What’s in an index?
Tech titans like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) have been driving markets higher, with the Tech sector up 35% in 2020. Meanwhile, the Financials sector has fallen 6% year to date, while Energy has plummeted 33%.