Growth Outperforms Value in Early 2023
2023.02.20 08:50
- What’s interesting is that by the start of 2023, large-cap growth has outperformed large-cap value by 1 basis point.
- In the mid-cap and small-cap asset classes, value continues to outperform growth, just on a smaller scale than in 2022;
- For the 1-year time frame, growth across all asset classes continues to show a loss for the 1-year time frame, while value has a positive return for the 1-year time period and beyond;
The attached spreadsheet is probably confusing but it’s the simplest way to quickly organize and update the data every 6 weeks.
Value outperformed growth smartly in 2022, the first time that’s happened in the large-cap space since 2016.
Growth has narrowed the difference in 2023, but it’s still early in the year.
The 2nd section of data on the spreadsheet, roughly from lines 18 to 26, shows the 1,3,5, 10, and 15-year returns of the iShares growth and value ETFs by large-cap, mid-cap, and small-cap.
Note the large-cap growth returns across the 1 to 15-year time frames. That may keep a lid on the asset class “exuberance” for a while.
Conclusion
2022 was badly needed as a “reset” year for the U.S. stock market across large-cap growth in particular, but if readers would look at 10 and 15-year returns across large-cap through small-cap, a case could be made for muted, conservative returns across all asset classes for some time. That doesn’t mean “sharply negative” returns, just muted upside.
We don’t know though, and so much depends on U.S. monetary policy.
It could also mean that it’s time to look at non-U.S. equity markets.
Past performance is no guarantee of future results.
