Growth once again beat value in the recently ended third quarter, and large caps had the advantage over their smaller counterparts. Large caps as measured by the Russell 1000 had a solid quarter (up 9.47%), with the Russell 1000 Growth Index (up 13.22 %) outpacing Russell 1000 Growth (up 5.58%) by a whopping 763 basis points.
Small caps as measured by the Russell 200 Index (up 4.93%) were also dominated by growth as R1000 Growth (up 7.16%) outperformed R1000 Value (up 2.56%) by 460 bps. Within microcaps, the Russell Microcap Index (up 3.69%) saw a 409 bps spread between the performance of its Growth Index (up 6.05%) and Value Index (up 1.96%).
Growth is also beating value year-to-date in all three of the aforementioned Russell Indexes, and cumulatively in the one-year through 10-year periods. The last time Value (up 17.34%) beat Growth (up 7.08%) over in a full year in the Russell 1000 was in 2016. Value (up 13.45%) also had a slight advantage over Growth (up 13.05%) in 2014, but that's just two wins in the past 10 years. Within the Russell 2000, Value beat Growth twice in the past 10 years, in 2016 and 2012. Within Microcaps, Value has beaten Growth tree times in the past 10 years, in 2018, 2016, and in 2012.
Depressing as these statistics may seem to the average value investor, don't give up. This situation does have some cyclical characteristics. Between 2000 and 2009, within the Russell 1000, Value beat Growth for nine consecutive years, until 2009. Within the Russell 2000, Value won in seven of 10 years, all but 2003, 2007, and 2009. Within the Russell Microcaps -- the Value and Growth components commenced in 2001 -- Value performed better in six of the nine years, all but 2003, 2007, and 2009.
We just happen to be in a cycle at this point, where growth is knocking the cover off of the ball. Value will have its day once again.
