Is Growth/Momentum Investing Moving Out Of Favor?
Brian Gilmartin | Apr 03, 2018 12:33AM ET
The President didn’t help the Growth/FAANG/Momentum crowd this morning with his tweets targeted at Amazon (NASDAQ:AMZN).
Looking at the above table, as of this weekend, it looks like Growth is maintaining its “alpha” over Value, although large-cap is seeing less of a premium than small-cap.
However, what is somewhat deceptive about that data, is the January ’18 style was very similar to 2017’s out-performance, the worm has started to turn in the last 60 days.
Let’s use two examples, the SP 500 Growth ETF (NYSE:IVW) versus the small-cap value ETF (NYSE:IJS):
Let’s also look at 1-month as well as Q1 ’18 returns:
IVW: SP 500 Growth ETF
- 3-month return: +1.81%
- 1-month return: -2.97%
IJS: SmallCap Value ETF
- 3-month return: -1.44%
- 1-month return: +1.37%
While not perfectly negatively correlated, there does seem to be some negative correlation.
Coming into 2018, some Tech and Q’s were sold and some IJS bought just from a “reversion to the mean” perspective, after tech and large-cap growth were up around 30% in 2017.
As the 2nd quarter starts, look for Tech/Growth/FAANG/Momentum to lose that performance premium and look for both the smaller-caps and Value to start to close the performance gap.
Note for the 12/31/17 column, the performance premium Growth held over Value for the full-year 2017. It was less dramatic in the mid and smallcap, but the premium was there.
The SP 500 is testing its 200-day moving average today. The February 9th, 2018 opening low for the SP 500 was 2.532.69 – that’s your line in the sand.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.