The second half of the year may bring a bullish move for both value and growth stocks. According to VettaFi’s Todd Rosenbluth, value stocks, which have previously been market laggards, could see an uptick in performance due to the FTSE Russell’s annual rebalancing. While growth stocks have been outperforming value stocks for quite some time, there is speculation that the tide may be turning in favor of value stocks.
The annual reconstitution of the Russell indexes on Friday reflects changes in the market as companies grow and shift. The iShares Russell 1000 Growth ETF has seen a 20% increase so far this year, while the iShares Russell 1000 Value ETF has only seen a 6% increase. This disparity in performance has sparked interest in the potential for value stocks to make a comeback in the second half of the year.
Todd Rosenbluth emphasizes the importance of having exposure to both growth and value stocks within a diversified portfolio. While there has been a skew towards growth stocks lately, there is recognition that value stocks can offer significant opportunities for investors. The pendulum has swung back and forth between growth and value stocks in the past, indicating the potential for value stocks to shine once again.
FTSE Russell CEO Fiona Bassett highlights the benefits of the Russell franchise in providing exposure to different segments of the market. The indices are structured to reflect the nature of the market, offering investors the option to concentrate on either value or growth stocks based on their preferences. This flexibility allows investors to tailor their portfolios according to their investing strategies.
According to FactSet data as of May 31, the top three holdings of the Russell 1000 Growth ETF include Microsoft, Apple, and Nvidia. On the other hand, the Russell 1000 Value ETF’s top holdings are Berkshire Hathaway, JPMorgan Chase, and Exxon Mobil. These holdings provide insight into the companies driving the performance of each ETF and can guide investors in making informed decisions about their portfolios.
The second half of the year holds potential for value stocks to make a comeback, driven by the annual rebalancing of the Russell indexes. Investors are advised to consider the benefits of diversification by including both growth and value stocks in their portfolios. With the market showing signs of turning towards value stocks, now may be an opportune time for investors to reassess their investment strategies and take advantage of the potential opportunities presented by value stocks.