What are some considerations when building a portfolio of growth vs. value stocks?

Key Takeaways

There are different approaches to portfolio construction when investing in growth stocks versus value stocks, especially when considering correlations.

Marc, what are some considerations when building a portfolio of growth versus value stocks?

Different Portfolio Approach to Growth Versus Value

One thing that's probably more difficult to do with growth stocks versus value stocks is to bet on one particular company. Growth stock investing is typically… in order to be successful at it, you need to take more of a portfolio approach and look at a basket of stocks that are going through that same trend because the market may or may not continue for each individual stock. You are looking at a group of stocks which are on an upward trajectory, whereas value stock may be slightly different since what you're doing is buying the stock. Towards the bottom or where it's undervalued and waiting for the market to recognize that value. You typically find more fundamental approaches in that area, and you typically have to wait for the market to start to recognize the value in that investment. And as such, you may be waiting around longer for the market to respond to whatever it is that you saw in that individual company.

Robert, what else would you add?

Value Funds: Closer Correlation

When you're dealing with value funds, there's a closer correlation to the way value funds perform.

Growth Funds: Less Correlation

When you gravitate toward growth funds, there's less of a correlation from one growth fund to another. When you get to aggressive growth, you're going tohave the widest deviation in fund performance from year to year. The widest separation between the best return, the highest return, and the lowest return. It's more pronounced in the aggressive growth style because the aggressive growth style within the growth style is the most volatile, and that's the basisfor it.

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Please note, that the thoughts expressed in this podcast are those of the presenter. This is not, nor should it be considered an offer or a solicitation of an offer for investment.

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What are some considerations when building a portfolio of growth vs. value stocks?

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