Professional investment managers have different styles and approaches. Two of the best known are growth and value.
Growth: The portfolio manager looks for companies that are growing rapidly – in their earnings, sales, and/or return on investment.
Value: This style focuses on bargains – undervalued, out-of-favour stocks with strong potential.
Both approaches can be successful. But as the chart below makes clear, one is usually outperforming the other, so it makes sense to invest with managers who use different styles. When one style is underperforming, returns from the other can help balance your portfolio’s overall performance.
In other words, style is another way to add diversification and perhaps reduce risk in your portfolio
Some portfolio managers use a combination of value and growth styles. Your advisor can help you decide which managers and styles are appropriate for your needs and goals.
Growth vs. value
Source: Morningstar Direct, December 31, 2024.
For definitions of technical terms in this piece, please visit iaclarington.com/glossary and speak with your investment advisor.
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