Disagreement is the only thing value and growth equity investors can ever seemingly agree about. And thus far this year, it’s investors who favor high-priced momentum styled growth stocks that are winning the argument.
Since the start of the year through early September, the Guggenheim S&P 500 Pure Growth ETF (RPG) has gained 13.89% versus a gain of 11.77% for the Guggenheim S&P 500 Pure Value ETF (RPV).
RPG screens S&P 500 growth stocks based upon sales and earnings growth along with price momentum. Among RPG’s top holdings are Keurig Green Mountain, Southwest Airlines and Netflix.
“Many market participants have a clear preference for risky growth stocks,” said Feifei Li, Ph.D., and Philip Lawton, Ph.D., CFA, in a research piece titled “True Grit: The Durable Low Volatility Effect.” “Indeed, their partiality is so strong that, in addition to rejecting value stocks, they often drive the price of growth stocks to unrealistically high levels.”