Growth Stocks Outpace Value By 10% As 2023 Nears End: Will The Trend Continue?

Zinger Key Points
  • Growth has trumped Value over the past decade and even over the past year.
  • With AI continuing to fuel technology stocks, growth may still have room to run.

So far, 2023 has been mostly about growth stocks. Sector performance within the S&P 500 indicates that growth-oriented stocks from the Information Technology and Communication Services sectors have been leading in returns.

Also Read: Value Stocks Hit 15-Month Low Against Growth As AI Fuels Tech’s Vengeance Over 2022’s Rate-Hike-Induced Market Fall

Growth stocks in the U.S. have bee outperforming value stocks over the past decade. The iShares Core S&P U.S. Growth ETF IUSG which serves as a proxy for stocks from growth-oriented sectors, has returned 191.54% versus the value stocks-tracking iShares Core S&P U.S. Value ETF IUSV which has gained 99.98%.

Over this past year, IUSG has returned 26.42% versus IUSV which has returned 15.47%.

The IUSG ETF tracks the S&P 900 Growth Index and is more heavily weighted towards the Electronic Technology (24.4%), Technology Services (19.98%) and Health Technology (12.18%) sectors. Top holdings of the fund include Apple Inc AAPL, Microsoft Corp MSFT, NVIDIA Corp NVDA, Alphabet Inc GOOGL and Tesla Inc TSLA. The top 10 holdings of the fund comprise 43.42% of the aggregate portfolio – implying a more concentrated portfolio.

The IUSV ETF, on the other hand, is more weighted toward the Finance sector, which comprises 22.68% of the portfolio. Its top holdings include Microsoft, Meta Platforms META and Inc AMZN but at a 5.54%, 3.76%, and 3.68% portfolio weight, respectively. The top 10 holdings comprise just over 25% weight in the portfolio, indicating a more spread out portfolio.

Over the past month, however, value appears to be taking over.

A $1000 invested in the IUSV ETF last month would have grown to $1,073.28. Comparatively, an investment in the IUSG ETF would have grown to $1,042.48 over the past month.

While value may have trumped growth over the past month, it appears growth still has room to grow. Specially, given the expansion of Artificial Intelligence and its rising use cases, fueling many technology stocks.

The value option may appeal more to investors who seek better downside protection in a bear market. Value stocks are more resilient to economic downturns compared to growth stocks, making them a potentially safer bet for long-term investors.

Now Read: Don’t Get Caught In Equity Rally Hype: Lessons From 2023 To Remember In 2024

Photo: Shutterstock

Market News and Data brought to you by Benzinga APIs
Posted In: EquitiesBroad U.S. Equity ETFsSpecialty ETFsMarketsETFsBZ Data ProjectExpert IdeasStories That Matter
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!