Value and Growth Funds Blurring

The latest issue so BARRON'S has an interesting article on the blurring of the line between growth and value investing mutual funds.

Seems that, because value funds have been doing so well ever since the infamous dotcom boom busted, many "growth" fund managers have been buying value stocks. Well, fair's fair, since during the late 1990s, many "value" fund managers bought into technology, just in time to experience the bust.

This illustrates another reason to avoid mutual funds if possible -- you can't depend on them to buy the kinds of investments they claim to specialize in.

It's also interesting that, according to this article, the line between value and growth investing is blurring. Value and growth managers are loading up on the same companies.

In theory, this could be the best of both worlds -- underpriced stocks that are growing faster than the market. Actually, the article doesn't describe the situation and is a little unclear, except to say that some stocks that were formerly growth favorites -- specifically, Wal-Mart, Microsoft and Dell -- have gotten so big that they can't deliver 20% a year growth any longer.

Personally, when it comes to growth I believe that Dr. Jeremy Siegel has the right idea -- it's a trap. Your returns are lower than you think they'll be because you pay too high a price.

When it comes to value, you may do well if the stock pays dividends, since you're presumably getting a good stream of income for a low price. If there're no dividends, you're engaging in a crap shoot. You may find a future. You may lose your money.



growth and value investing blurring
growth and value investing blurring