Chart of the week: a new low for value stocks

published 12 August 2019

Chart of MSCI world value index vs MSCI world growth index

Over the very long term, value stocks (those that trade at lower valuations than the wider market) have tended to beat growth stocks (those that trade at higher valuations). However, in the shorter term, growth stocks can do better than value stocks for sustained periods and that's been the trend for around a decade now.

The outperformance of growth has been so great since the eve of the global financial crisis that the MSCI World Value index is trading at its lowest level relative to the MSCI World Growth index since the peak of the dotcom bubble, says Justina Lee on Bloomberg. That point marked the start of a boom in value stocks they beat their growth peers by 50% over the next 12 months. Will it be the same story this time?