The year’s second half could bring a bullish move for both value and growth stocks, according to VettaFi’s Todd Rosenbluth. In a recent interview on CNBC’s “ETF Edge,” Rosenbluth expressed optimism for value stocks, which have historically been market laggards. He pointed to the FTSE Russell’s annual rebalancing as a potential catalyst for a resurgence in value stocks. Rosenbluth emphasized the importance of paying attention to value, especially considering the prolonged period during which growth stocks have outperformed value.
The recent reconstitution of the Russell indexes reflects changes in the market as companies grow and shift. While the iShares Russell 1000 Growth ETF has seen a 20% increase so far this year, the iShares Russell 1000 Value ETF has only gone up by almost 6%. Despite this performance gap, Rosenbluth believes there is merit in incorporating both growth and value stocks in a diversified portfolio. He acknowledged that the market sentiment has been skewed towards growth, but noted that there have been instances where the pendulum swung back in favor of value.
FTSE Russell CEO Fiona Bassett echoed Rosenbluth’s sentiments on the market dynamics. She highlighted the versatility of the Russell indices in providing exposure to different investment strategies, such as value and growth. Bassett emphasized that the indices are designed to mirror the nature of the market, offering investors the opportunity to concentrate their holdings on specific sectors or styles.
According to FactSet data as of May 31, the top holdings of the Russell 1000 Growth ETF include Microsoft, Apple, and Nvidia. In contrast, the Russell 1000 Value ETF’s top holdings consist of Berkshire Hathaway, JPMorgan Chase, and Exxon Mobil. These differences in holdings reflect the contrasting investment philosophies between growth and value strategies. Despite the recent outperformance of growth stocks, there is a possibility for value stocks to stage a comeback in the latter half of the year.
The evolving market dynamics and the annual rebalancing of the Russell indexes could potentially lead to a resurgence in value stocks. Investors should consider incorporating both growth and value stocks in their portfolios to achieve diversification and capitalize on market opportunities. By understanding the nuances of value and growth investing, investors can make informed decisions to navigate the market landscape effectively.