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By Christine Benz and Shannon Zimmerman | 05-02-2013 12:00 PM

These Growth Funds Aren't Laggards

Although value funds have led the pack during this year's equity bull run, a handful of growth-oriented portfolios have held their own.

Christine Benz: Hi. I’m Christine Benz for We’re four months into 2013, and stock-fund performance has generally been quite strong. Joining me to provide a recap of the year to date in fund performance is Shannon Zimmerman. He is associate director of fund analysis for Morningstar. Shannon, thank you so much for being here.

Shannon Zimmerman: Good to be with you, Christine.

Benz: Shannon, let’s discuss some of the best-performing categories year to date.

Zimmerman: So far year to date, and this through the end of April, what you see among the diversified domestic-equity categories here at Morningstar, value has trumped growth and larger has trumped smaller. But not to a fund. There certainly are some outliers, and we’ll talk about a couple of those in a minute. But so far anyway, if the pattern persists, it looks like this is going to be a good year for value.

Benz: But, nonetheless, strong performance really across the board.

Zimmerman: Absolutely.

Benz: So even though you’ve been better off in value and maybe large caps versus small, even if you had a small-growth fund, you're still looking at positive returns for the year to date.

Zimmerman: Everyone's a winner.

Benz: So, in terms of the value categories that have performed best, is it large value at the top of the heap?

Zimmerman: Large and mid, they're sort of close by. [There have been] double-digit returns so far on the year for those.

Benz: So what do you think is driving that trend?

Zimmerman: So a couple of things. I think that on the one hand, you hear it from a lot of pundits and some fairly talented money managers who’ve been at this for quite a while that the market does look pretty fully valued. This is a lengthy bull run. In some ways, it’s approaching the time that people are going to start calling it a historic bull run.

Benz: Four years really with some bumps along the way.

Zimmerman: Exactly. I think that for a lot of investors, and for lot of analysts, frankly, it doesn’t feel that way because we’re still sort of shell-shocked from 2008. So, while we fell so far, surely we’re going to need some time to get back to where we should have been if it hadn’t happened. But still by historic standards, this is a lengthy bull run. So a lot of folks, pundits and talented money managers, are saying the market looks pretty fully valued. So that may be one way of explaining why value has trumped growth so far this year.

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