by etienner
It seems like a lot of people, mostly under 25, want to invest in growth ETFs and ignore value ETFs. For a lot of them the reason is growth stocks have a higher earnings growth, therefore they should outperform value stocks. However, except for the past 10 years, it hasn’t been true, and I believe it still isn’t. And I don’t believe this time is different (The last time this was told about growth stocks, it was in 1999 and it ended badly). It seems like investors are willing to overpay for growth, which is why growth underperforms value.
If you still believe growth is superior, look at the data here. If you don’t want to investing in value stocks because they have underperformed for the past 10 years, why would you invest in stocks that underperformed value stocks 94% of 20-year periods (source). Outperformance of value stocks can also be seen in large caps, mid caps and small caps here.