Anyone else notice that growth funds have been outperforming value funds? Seems weird to see that during all this volatility. Thoughts?

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Most value funds have been overweight in energy which has been getting decimated.

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Value’s poor performance is more due to financials. But lots of growth stocks are holding up really well - look at semis and biotech. Strong evidence that they will lead the market once this correction is over.

Which growth funds are you referring to?

IWF vs IWD for starters

Seems contrary that the dividend funds are doing worse through sell off but it is true—overweight in oil.

Also growth companies are better positioned to weather any temporary downturn. Most big multinationals grow at GDP +/- a little. Companies that dominate a fast growing niche (certain chip companies, software, biotech, etc) will continue to grow very fast. See the 2015/early 2016 global slowdown when growth stocks outperformed massively.

Furthermore low interest rates increase the valuation of growth companies more than they do for value companies. Most of the value in an emerging growth company is in their future earnings - 5+ years out, not just next year. Discounting back an estimate of earnings in the out years using a lower interest rate results in a big increase to present value. Companies that are valued based on a multiple of book value, or have high current earnings and modest expected future growth (low PE) receive a proportionally smaller benefit.

It's blowing my mind and pissing me off because the exact opposite of how I positioned portfolios for the last 12 month. 🤬

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