At first, the US Russell 3000 Value index (RAV) out-performed Growth (RAG) for over 6 years. Then 2008 happened and everything got crushed. Since then, Growth has out-performed Value by a huge margin.
Look at the chart closely, however, and you will notice that plain-vanilla cap-weight (RUA) is bang in the middle. Sure, it trailed Growth by about 60% cumulated over 15 years. But equities are only a part of a diversified portfolio and going cap-weight doesn’t require you to choose between Growth and Value – an endless debate that even academics are divided over. Cap-weight is good enough.
Besides, Growth out-performed Value by a noticeable margin in only 4 out of 15 years. Otherwise, the returns have been more or less on par:
There will always be debate over which strategy is “better” but sometimes, given a choice between Chocolate Chip and Very Berry Strawberry, picking Vanilla and sticking with it over the long haul makes the most sense.
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