While investors embrace concepts of growth and value as dominant influences of large capitalization equity management, Ruo Tan, president of Segal Rogerscasey Canada, says “sub-styles also play a significant role in determining an investors’ outcome.” Using data for a 10-year period, it found that not only do growth and value rotate over time, but the sub-styles also alternate. In some cases, these differences are quite stark. The take-away here, says Tan, is that investors should be keenly aware that simply owning growth or value in active portfolios only tells part of the story. While sub-styles tend to move with other similar styles, some substantial differences occur along the way. “This certainly would seem to argue for having a program that is diversified across styles and sub-styles, and rebalancing regularly,” he says.
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