Small Cap Value vs Large Cap Growth
Posted on: August 17, 2013
If you are a typical investor, given the choice between investing in a small cap value fund or a large cap growth fund, which one would you choose?
You would probably go with the large cap growth since “large cap” sounds a lot safer than “small cap,” and “growth” sounds a lot more promising than “value.”
To prove how wrong you are, I did a study of the relative performances of these two styles in the eight decades between 1931 and 2010. Here is what I found.
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|
Decade |
Small Cap Value |
Large Cap Growth |
|
1931 – 1940 |
15.53% |
9.51% |
|
1941 – 1950 |
28.18% |
12.09% |
|
1951 – 1960 |
13.39% |
12.47% |
|
1961 – 1970 |
14.22% |
5.09% |
|
1971 -1980 |
15.24% |
4.87% |
|
1981 – 1990 |
14.10% |
13.43% |
|
1991 – 2000 |
17.82% |
14.04% |
|
2001 – 2010 |
9.92% |
3.25% |
Can you believe your eyes? There is not a single decade when large cap growth outperformed small cap value.
If your stock investment is mostly in glamourous large cap growth stocks (just like most advisors do to their clients,) you are not getting all that the market has to offer. You need to order a 2nd opinion review with me.
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The Investment Scientist 
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