Growth Leads the Pack
Markets have been volatile in recent months but Growth has beaten Value over several significant measurable periods. One key factor may be that accounting standards have failed to keep pace with the changing economy.​​

Chart showing growth outperforms value time and again 


  • In the U.S. Growth beat out Value in the one-year, three-year and five-year time periods across all market capitalizations. What might have led to this outperformance?

  • Outdated accounting rules may have caused a structural issue in current methods of style classification. The problem stems from the accounting metric of price-to-book value, which compares a company’s market equity value (or “price”) to its reported equity value on its balance sheet (“book value”).

  • Book value, however, may no longer represent a company’s true earnings power. The reason is companies are increasingly investing in intangible assets, which generally are not recorded on balance sheets, where book value appears.

  • This issue may continue to benefit Growth stocks relative to Value equities in the future, but at a minimum, it is something investors should consider given the trillions of dollars allocated based on style classifications.


​The views expressed are the views of Fred Alger Management, Inc. as of February 2019. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. 
Risk Disclosure: Investing in the stock market involves risks, and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Healthcare companies may be significantly affected by competition, innovation, regulation, and product obsolescence, and may be more volatile than the securities of other companies. 
The Morningstar U.S. Large Growth Index measures the performance of large-cap stocks that are expected to grow at a faster pace than the rest of the market as measured by forward earnings, historical earnings, book value, cash flow and sales. 
The Morningstar U.S. Mid Growth Index measures the performance of mid-cap stocks that are expected to grow at a faster pace than the rest of the market as measured by forward earnings, historical earnings, book value, cash flow and sales.  
The Morningstar U.S. Small Growth Index measures the performance of small-cap stocks that are expected to grow at a faster pace than the rest of the market as measured by forward earnings, historical earnings, book value, cash flow and sales. 
The Morningstar U.S. Large Value Index measures the performance of large-cap stocks with relatively low prices given anticipated per-share earnings, book value, cash flow, sales and dividends.  
The Morningstar U.S. Mid Value Index measures the performance of mid-cap stocks with relatively low prices given the anticipated per-share earnings, book value, cash flow, sales and dividends. 
The Morningstar U.S. Small Value Index measures the performance of small-cap stocks with relatively low prices given anticipated per-share earnings, book value, cash flow, sales and dividends. 
Investors cannot invest directly in an index. Index performance does not reflect deductions for fees, expenses or tax. Performance data quoted represents past perfo¬mance. Past performance is no guarantee of future results. ​

This material must be accompanied by t​he most recent fund fact sheet(s) if used in connection with the sale of mutual fund shares.

Fred Alger & Company, Incorporated 360 Park Avenue South, New York, NY 10010 / www.alger.com

800.305.8547 (Retail) / 212.806.8869 (Institutional) ​