To be exact, there are 44 U.S. growth ETFs and 44 U.S. value
ETFs that cover small caps, midcaps, large caps or the total
market. That compares with 110 U.S. equity ETFs that don't have
style designations, so style ETFs make up a little over 44 percent
of the U.S. equity offerings (I didn't included leveraged and
inverse funds in my tally. With them, I counted 259 U.S. equity
funds, 105 of which are focused on style).
The market is pretty significant and, as I said, growing.
Russell recently launched not one, but three different types of
growth ETFs for investors who want to get a little more
granular.
Seeing all of these ETFs, I was curious whether the choice of a
growth or value fund really made a difference.
I looked at eight pairs of ETFs that cover the growth and value
portions of their respective indexes. Those ETFs are:
- WisdomTree LargeCap Growth (NYSEArca:ROI)
- WisdomTree LargeCap Value (NYSEArca:EZY)
- Vanguard Mega Cap 300 Growth (NYSEArca:MGK)
- Vanguard Mega Cap 300 Value (NYSEArca:MGV)
- Schwab U.S. Large-Cap Growth (NYSEArca:SCHG)
- Schwab U.S. Large-Cap Value (NYSEArca:SCHV)
- Rydex S&P 500 Pure Growth (NYSEArca:RPG)
- Rydex S&P 500 Pure Value (NYSEArca:RPV)
- PowerShares Dynamic Large Cap Growth Portfolio
(NYSEArca:PWB)
- PowerShares Dynamic Large Cap Value Portfolio
(NYSEArca:PWV)
- iShares S&P 500 Growth (NYSEArca:IVW)
- iShares S&P 500 Value (NYSEArca:IVE)
- iShares Russell 1000 Growth (NYSEArca:IWF)
- iShares Russell 1000 Value (NYSEArca:IWD)
- First Trust Large Cap Growth Opportunities AlphaDEX
(NYSEArca:FTC)
- First Trust Large Cap Value Opportunities AlphaDEX
(NYSEArca:FTA)
Over a one-year period, on average, the growth funds
outperformed the value funds. The overall returns for the growth
funds were clustered around 30 percent, with Rydex's RPG standing
out from the pack with returns of about 42 percent in the past
year.
But when you break it down into the difference in returns
between each of the index pairs and look at different time periods,
the story changes a little bit.
The table below shows the percentage difference between each
issuer's growth and value funds for the time period indicated. The
numbers reflect growth relative to value returns.
Again, the actual returns in the past year for all of the growth
funds I looked at were clustered around 30 percent, so what you're
looking at in the table below is just the difference between each
fund sponsor's growth and value ETFs, in percentage terms.
|
|
WisdomTree
|
Vanguard
|
Schwab
|
Rydex
|
PowerShares
|
iShares S&P
|
iShares Russell
|
First Trust
|
|
1m
|
1.78%
|
3.69%
|
2.38%
|
3.94%
|
3.49%
|
3.07%
|
3.11%
|
3.34%
|
|
3m
|
0.11%
|
2.87%
|
1.40%
|
2.61%
|
0.70%
|
3.90%
|
1.92%
|
0.82%
|
|
6m
|
-2.16%
|
1.87%
|
1.59%
|
4.21%
|
1.56%
|
4.66%
|
2.92%
|
2.88%
|
|
1y
|
-5.82%
|
5.49%
|
7.56%
|
14.57%
|
7.78%
|
7.33%
|
7.95%
|
6.78%
|
As you can see, the WisdomTree value fund actually outperformed
its growth fund over the year. The Rydex Growth fund far
outperformed its value fund. Other than those outliers, growth
funds outperformed the value funds in a similar fashion for the
one-month and one-year time periods. Still, the three-month and
six-month return discrepancies are all over the place.
Each index provider has different rules governing the population
of its growth and value indexes. Some include "core" stocks in both
indexes, thus narrowing the gap between the two. They also all use
different selection and weighting methods, which impact returns.
Rydex's value and growth funds, in particular, both outperformed
the other ETFs in their segments:RPG returned 42 percent and RPV
returned 27 percent.
Over the past year, there's a 6 percent difference between
returns of the average growth fund and the average value fund.
Even among the growth funds, there's an 18 percent difference
between the highest growth performer (Rydex's RPG) and the lowest
growth performer (WisdomTree's ROI).
Similarly, there's 9 percent difference between the highest
value performer (WisdomTree's EZY) and the lowest value performer
(iShares' IVE).
Long story short-style designations do matter, but your choice
of ETF and time period matter more.
Don't forget to check IndexUniverse.com's ETF Data
section.
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