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First Quarter in U.S. Equity Funds: Growth Dominates Value

After a tough 2016, growth made a comeback in 2017's first quarter.

U.S. stocks continued their march higher during 2017’s first quarter to date through March 30. The S&P 500 was up 6.3%, while the Russell 2000 Index was up 2.2%. For most of the quarter, investors remained upbeat that a Donald Trump presidency would result in pro-growth policy changes, though doubts are mounting after a failed effort to reform U.S. healthcare in late March. Economic data--including employment reports and consumer confidence--was generally strong during the first quarter, contributing to the Federal Reserve's March decision to raise short-term interest rates for the second time in four months.

Technology stocks within the broad Russell 3000 Index have led the way in the first quarter, climbing 12%. Tech giants

After rising more than 50% in 2016, Brent crude prices fell 7% to $52.42 for the quarter to date. As a result, the energy sector was down about 7% in the first quarter. Poor performers include exploration and production players

Morningstar Style Box Categories

Large-cap funds outperformed their smaller-cap counterparts in the first quarter of 2017. The large-growth Morningstar Category was the top-performing category in the Morningstar Style Box for the quarter to date through March 30, gaining 8.8%. Silver-rated

In the mid-cap space, growth also fared better than value during the quarter: The mid-cap growth category gained 7.3%, while the mid-cap value category was up 3.5%. In the mid-cap growth category, Bronze-rated

After posting the highest returns of the Morningstar Style Box categories in 2016, small-value and small-blend were the weakest-performing categories for the quarter to date through March 30, 2017, gaining just 0.1% and 1.6%, respectively. Gold-rated

For additional details on Morningstar Categories, visit this Fund Category Performance page. PDF versions of the tables are available: Top and Bottom.

- source: Morningstar Analysts. Data through March 30, 2017.

- source: Morningstar Analysts. Data through March 30, 2017.

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About the Author

Andrew Daniels

Associate Director
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Andrew Daniels, CFA, CAIA, is associate director of equity strategies for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He helps oversee Morningstar’s U.S.-based equity strategies team and is responsible for qualitative research on prominent equity strategies, including those offered by Harris Associates and Artisan Partners.

From 2018-21, Daniels was based in Morningstar’s Hong Kong office, conducting qualitative research on global emerging-markets and Asia-Pacific equity strategies, in addition to helping on the delivery of manager research services in the region.

Before joining Morningstar in 2015, Daniels worked in corporate finance for Caterpillar and in portfolio management for Evanston Advisors.

Daniels holds bachelor's degrees in finance, economics, and marketing from the University of Iowa, where he graduated with distinction. He also earned a Master of Business Administration from the University of Chicago Booth School of Business. Daniels holds the Chartered Financial Analyst® designation and the Chartered Alternative Investment Analyst® designation. He is also a Certified Management Accountant.

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