Value Versus Growth
Chart of the Week for August 31 - September 6, 2007
It is often debated whether higher stock market returns can be achieved by investing in stocks labeled as “growth” or “value”. Historically, those seeking to invest in value stocks search for undervalued companies with relatively low price-to-earnings (P/E) ratios and high dividend yields. On the other hand, those investing in growth stocks search for companies with high earnings growth that tend to sell at higher P/E ratios with low dividend yields.
The chart above illustrates that growth and value styles may fall in and out of favor with the market as well as highlights the importance of diversification across styles. The bars above the 0% mark represent the months that value stocks have outperformed growth stocks, while the bars below the 0% show the months that value stocks have underperformed growth stocks.
As of July 31, 2007, value stocks, as represented by the Russell 1000 Value Index, underperformed growth stocks, represented by the Russell 1000 Growth Index, for the year-to-date and trailing one-year time periods. Although value stocks are currently underperforming growth stocks, value stocks have earned investors larger returns over the past three and five year periods. As there is no way to predict which direction the market will go and past performance is no guarantee of future results, it is important for investors to remain diversified and not chase performance.
*This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.Please consult both the current applicable prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights, investment objectives, risks and performance information. Investing in mutual funds and other investment vehicles involves risk, including possible loss of the amount invested. Investors should consider the Fund's investment objectives, risks, charges and expenses before investing or sending money. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing. All Vantagepoint Funds invested through 401 or 457 plans are held through VantageTrust. Vantagepoint Funds are distributed by ICMA-RC Services LLC, a wholly owned broker-dealer subsidiary of ICMA-RC and member FINRA/SIPC. For a current prospectus, contact ICMA-RC Services, LLC.The performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 1-800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240. Para asistencia en Español llame al 1-800-669-8216. Performance data current to the most recent quarter end is available by visiting www.icmarc.org.
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