If it feels like growth investing has been dominating the markets for a while, you’re absolutely right. Growth has continued to outpace value, marking a trend that’s been hard to ignore. But does this mean value investing is dead?
Not so fast.
Let’s zoom out:
A Historical Perspective
Since 2007, growth has outperformed value in 14 of the past 18 years—that’s nearly 80% of the time.
Even more remarkable is the scale of this outperformance. In years when growth led, it beat value by an average of 12.9% annually—a significant margin compared to the 4.0% annual average since 1990.
2024 was particularly exceptional. It marked only the second time in history where growth outperformed value by 20%+ in back-to-back years (the other being 1998-1999). This puts last year in the company of standout years like 1998, 1999, 2020, and 2023.
The Cyclical Nature of Style Investing
While growth has been the clear winner since 2007, it wasn’t always this way.
Between 1991 and 2006, value was the leader, outperforming growth in 9 of those 16 years.
Investing styles are inherently cyclical, and value will likely have its time in the spotlight again.
Why Style Bets Matter
The urge to “ride the wave” of a dominant investing style is understandable, but history shows that significant style tilts can introduce risks:
In 17 of the past 34 years, one style (growth or value) outperformed the other by 10%+.
In 7 of those years, the margin exceeded 20%.
For investors, this means getting the style call wrong could turn a good market year into a bad one—or a bad year into something worse.
The Takeaway
While growth has been a consistent winner recently, style investing is cyclical. Overweighting one style can expose your portfolio to substantial risks. A balanced approach can help mitigate these risks and provide smoother returns over time.
