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By Christine Benz and Jeremy Glaser | 12-03-2015 03:00 PM

Benz: The 4 Biggest Investment Surprises of 2015

Continued dominance of growth stocks, junk-bond drama, and poor performance of some high-quality funds were among the surprises last year.

Jeremy Glaser: For Morningstar, I'm Jeremy Glaser. I'm here with Christine Benz--she's our director of personal finance--and she's going to share her four biggest investment surprises of 2015. Christine, thanks for joining me.

Christine Benz: Jeremy, great to be here.

Glaser: Your first surprise is the continued dominance of growth stocks. Why is this surprising to you? 

Benz: Well, our analysts have been thinking that the market, in aggregate, is maybe looking a little bit overvalued--maybe a little less so right now but certainly, earlier in the year, all of their research was pointing to the market being slightly overvalued. And at some point in such environments, growth stocks hand it off to value, and value stocks start to outperform. The reason that didn't happen, I think, owes in large part to the energy sector, which has really weighed on value funds, in particular. We've seen really strong outperformance: The Russell 1000 Growth Index is up about 7% year to date; the Russell 1000 Value Index is down about 3% for the year to date through mid-December. 

That's surprising to me given the point we are at in the current rally. Also, the breadth of the strength in growth stocks is somewhat surprising to me. There's been a lot written about the strength in just a handful of technology stocks and how that's driven a lot of the Nasdaq's performance; but really, when you look across growth sectors even, you see strong performance beyond the technology sector. You see that companies like Home Depot (HD) have performed very, very well; a handful of the pharma names have performed well; McDonald's (MCD) has performed well. So, the strength and performance hasn't just been concentrated in those big tech names that everyone seems to be talking about.

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