Growth & Value: The Right Way to Invest in Mutual Funds
Too often fund investing feels like an endless series of near misses, but it doesn't have to be that way.
A cursory look at just the past 10 years highlights a painful, prevalent trend: Once an investment style gets the wind at its back, money gushes in -- often just in time for its sails to slacken. This is true whether you're talking about funds that follow a tech-heavy growth style or funds whose more price-conscious, tech-light style earns them a value label.
Consider investors' growing appetite for value funds. In 1998 and 1999, the average big-cap value fund gained 6.6% and 6.1%, respectively. That paled in comparison to the average big-cap growth fund's 34.1% and 39.2% gains in the same years. So, redemptions from value funds outpaced investments in 1999. Unfortunately, outflows continued in 2000 when the average big-cap value fund was one of the fund world's few ports in the past year's storm. ...
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