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What's Best: Value or Growth?

Deciding what type of stock fund you'd like to invest in---those whose portfolio managers prefer value stocks or those liking growth stocks ---can be challenging. But now there's some research that may help you make that decision.

Lipper Inc. has just released its latest FundIndustry Insight Report. Titled, The Sources of Excess Return in Growth and Value Funds, the report takes a look at what kind of fund performs better over the long run. And the answer: Value.

"The bottom line is , value beats growth because it (a value stock) pays greater dividends on average than what a growth stock does, " says Andrew Clark, a senior research analyst at Lipper.

Other report findings showed that the earnings per share, EPS, growth rates of growth and value mutual funds were basically the same over the long-term; that the value premium is real; and, that the size premium ( i.e., whether it's a small-cap stock or a large-cap one) of a company may not really impact performance as much as previously thought.

So what's all of this mean to investors?

"If you're invested for the long term, like 10, 20, or 30 years or more, you'd probably want to be more weighted towards value, " says Clark. " And, the only difference between growth and value in the long term is that value pays more dividends."

Calling all Hispanics. If you'd like to increase your knowledge about investing, here's a free bilingual investor educational web course that can help. Titled, Invertir con Exito, and available on line at http://invertirconexito.icief.org , this two-hour, self-paced, interactive program is presented in both Spanish and English. And, worth a visit.

Research shows that Hispanics are the fastest-growing segment of today's population and that nearly three-quarters of Hispanic households are concerned about not saving enough to meet their financial needs ---like saving for retirement or funding their children's educations.

Rosario Marin, Treasurer of the United States has joined with the Hispanic College Fund, Inc. and the Investment Company Institution Education Foundation in promoting the site. "It is fundamentally important for families, especially Latinos, to start saving money for their children's college education," says Treasurer Marin.

Before beginning the program there's a 10-question Test Your Money Smarts quiz from the Securities and Exchange Commission that's worth taking. It covers the top 10 things you should know about money.Then, the course itself includes topics such as how to get started investing and saving, goal setting, understanding risk and setting realistic goals. For those who complete the course, there's even a certificate of completion.

The Investing for Success program was launched in May 2000 by the Investment Company Institute Education Foundation and the National Urban League to strengthen investor awareness in the African-American community. Last year it was expanded to include the Hispanic community.

Whether you speak Spanish or English, odds are you'll learn something at this site.


Dian Vujovich is a nationally syndicated mutual fund columnist, author of a number of books including Straight Talk About Mutual Funds (McGraw-Hill), and publisher of this web site.

To read more articles, please visit the column archive.

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