This commentary is available as a PDF here.

Summary

Style boxes give us the impression that “growth” and “value” sit at opposite ends of the spectrum.
In reality, whether a company is growing or shrinking (“growth”) is independent of whether a security is cheap or expensive (“value”).
To align with the single axis expectation of “growth versus value,” most index providers combine a growth score and a value score together to create a composite score, which is projected upon the “growth / value” spectrum.
In doing so, most value indices are laden with cheap, shrinking companies and most growth indices focus on expensive, growing ones. Neither truly represents a value or growth approach to investing.

Month: February 2016