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  A Snapshot Of Growth vs. Value Investing (Small-Caps)
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View from the Observation Deck  
  1. We update this post on small-cap stocks every now and then so that investors can see which of the two styles (growth or value) are delivering the better results.
  2. The S&P SmallCap 600 Pure Growth Index closed at 16,580.69 on 6/30/21. It stood 6.41% below its all-time closing high (2/9/21), according to Bloomberg. The S&P SmallCap 600 Pure Value Index closed at 9,442.31 on 6/30/21. It stood 4.66% below its all-time closing high (6/8/21).
  3. While the S&P SmallCap 600 Pure Growth Index outperformed its value counterpart in four of the six periods, the S&P SmallCap 600 Pure Value Index has the edge over the past year, including year-to-date.
  4. The returns through 6/30/21 were as follows (Pure Growth vs. Pure Value): 15-year average annualized (10.88% vs. 7.73%); 10-year average annualized (12.86% vs. 10.49%); 5-year average annualized (15.62% vs. 12.19%); 3-year average annualized (9.78% vs. 8.55%); 1-year (63.37% vs. 103.58%) and year-to-date (18.23% vs. 43.50%).
  5. As of  6/30/21, the largest sector weighting in the S&P Small-Cap 600 Pure Growth Index was Health Care at 23.0%, according to S&P Dow Jones Indices. The largest sector in the S&P SmallCap 600 Pure Value Index was Financials at 20.2%.
  6. The sharp decline in COVID-19 cases in recent months, due largely to the deployment of the vaccines, has enabled the U.S. economy to reopen at a quicker pace than expected, according to Zacks. It notes that, small businesses, which create more than 50% of all jobs in the private sector, are ramping up their business activities. 
  7. The National Federation of Small Business' Optimism Index stood at a reading of 99.6 in May 2021 (most recent data), below its 10-year high of 108.8 in August 2018, but above its 97.9 average for the period. 

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The S&P SmallCap 600 Index is an unmanaged index of 600 stocks used to measure small-cap U.S. stock market performance. The S&P SmallCap 600 Pure Growth Index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest growth characteristics based on three factors: sales growth, the ratio of earnings-change to price, and momentum. It includes only those components of the parent index that exhibit strong growth characteristics, and weights them by growth score. Constituents are drawn from the S&P SmallCap 600 Index. The S&P SmallCap 600 Pure Value Index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest value characteristics based on three factors: the ratios of book value, earnings, and sales to price. It includes only those components of the parent index that exhibit strong value characteristics, and weights them by value score.

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Posted on Tuesday, July 6, 2021 @ 1:30 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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