It's no secret that value investing has lagged growth investing since the post-financial crisis bull market began, and it's all too predictable that investors would give up on the sector at just the wrong time. Indeed, the team at Morningstar discovered the flow of funds in value funds turned negative toward the end of 2015. Since, the iShares Russell 100 Value ETF (NYSEARCA:IWD) has outperformed the iShares Russell 1000 Growth ETF (NYSEARCA:IWF).
To review, there's plenty of academic research finding value stocks outperform growth over the long term - with the emphasis on long term. Morningstar: "Value exists because there are suckers on the other side of the poker table willing to take the flipside of the value bet."
The bulk of Bank of America Merrill Lynch's 2016 global outlook is a near-perfect extrapolation of current trends and themes - modest economic growth, a slow rise in U.S. rates diverging from other global central banks, commodities and credit under pressure, continued recovery in U.S. housing.
One standout line does interest however, and that's the team's expectation for value to make a comeback versus growth.
The research is fairly ample that value trumps growth, but it hasn't worked out that way for years. As measured by the Vanguard Value ETF (NYSEARCA:VTV) and the Vanguard Growth ETF (NYSEARCA:VUG), growth has trumped value by 690 basis points this year, and more than 2K basis points over the last five years.
It brings to mind another long period of growth beating value - the mid-to-late 1990s (how'd that one work out?).
We'll call it a combination of the ETF price wars and rising AUM, but Vanguard is cutting the expense ratio on twelve of its funds to just twelve basis points. Following is the list of funds and the number of basis points they're being cut:
Russell Investments is planning its annual index realignment today, affecting more than $5T in assets. Credit Suisse estimates $42B will trade as a result of the adjustment, resulting in one of the biggest trading days of the year in terms of dollar volume.
Asset managers and investors will have to realign their portfolios to match up with the new shifts in indices such as the Russell 2000 and the Russell 3000.
Due to the expected surge in volume, exchanges are now busy preparing for possible technical issues occurring over the course of the day.
Yesterday, the London Stock Exchange said it will acquire Frank Russell for $2.7B.
London Stock Exchange (LDNXF) has announced that it is buying the asset-management and stock index unit Frank Russell for $2.7B. A large chunk of the funding for the acquisition will be based off a $1.6B rights issue to be issued in September.
The stock-index operations of Frank Russell include the Russell 2000 barometer of small-cap stocks, while the investment business has $256B in assets under management.