BY MARK JEWELL

BOSTON (AP) ¿ Who doesn't want a good value? At a time when stocks have been hard-hit, many investors have assumed now is the time to shop in the bargain bin, making value funds look that much more attractive than pricier growth funds.

But you may be in for a surprise when you check the performance of your mutual fund or 401(k) over the latest quarter. Your growth funds are likely to have done better than your value funds.

On the value side, you can own a piece of an established company whose stock may be battered, but boasts a long-term record of mostly steady profits and possibly even dividend payouts. If you go with growth, you're willing to pay a premium for the greater likelihood that the company's profits ¿ and its stock ¿ will climb.

In the first quarter, you probably ended up losing no matter which approach you favor. After all, the Standard & Poor's 500 index closed down 11.7 percent, despite March's rally.

But that loss was much more painful if you put your faith mostly in value stocks. If you started the year with $10,000 in a large-cap value fund, you ended up losing an average of $1,315 in just three months, according to fund tracker Lipper Inc. Your loss in the average large-cap growth fund? An easier-to-stomach $373.

The same gap held for the stocks of smaller companies, where growth funds lost an average of about 8 percent to 15 percent for value funds.

Growth's current bragging rights mark a shift from recent history ¿ growth stocks have trailed value stocks for eight of the past nine years.

Growth's dominance in this year's first three months "kind of explains the quarter," said Tom Forester, manager of the Forester Value Fund (FVALX). "It's just a huge disparity."

Forester is especially familiar with the changing dynamic. His fund was last year's top performing large-cap value fund ¿ when nearly every other fund was losing-big time, Forester Value eked out a 0.4 percent gain in 2008. The fund's play-it-safe strategy emphasizes stocks like Wal-Mart Stores Inc. and McDonald's Corp. that draw budget-conscious consumers. But through the first quarter, the fund lost nearly 9 percent ¿ and that was better than nearly nine out of 10 of that fund's large-value peers.

That's in sharp contrast to the nearly 8.4 percent gain recorded by the first quarter's top-performing large-cap growth fund: Van Kampen Equity Growth (VEGAX), whose top holdings include recent growth stars such as Apple Inc. (up 23 percent for the first quarter) and Google Inc. (up 13 percent).

The reason why growth is beating value? Most bank and financial stocks fall in the value category, and those stocks continued to founder. Financial services funds lost nearly 24 percent on average in the quarter, according to Lipper. Real estate funds, another value category standby, did even worse, losing 30 percent.

Meanwhile, most technology stocks are classified as growth, and they prospered, relatively speaking. Science and technology funds gained nearly 4 percent on average last quarter, while telecommunications funds lost less than 2 percent. And the technology-heavy Nasdaq was the first quarter's standout among major market indexes, falling just 3 percent.

Some argue growth's edge will prove fleeting, since history shows that outperformance by either category is usually brief, despite value's dominance this decade.

Others argue growth stocks are set for the long run to reclaim the performance edge they held in the go-go late 1990s. That was just before the dot-com boom deflated early this decade, which ushered in a more conservative approach to investing that gave value stocks an edge.

Shawn Price, co-manager of the Touchstone Large Cap Growth Fund (TEQAX), argues a long list of financial measures ¿ from earnings expectations to how much companies are reinvesting in their businesses ¿ now generally favor prospects for growth stocks.

Price also argues that the value category's "huge outperformance between 2000 and 2006 set the stage for growth to have the better fundamentals now, and a better chance at outperforming."

Meanwhile, tech companies generally have plenty of cash now and little debt, which could fuel growth's continued edge, said Morningstar Inc. fund analyst John Coumarianos.

With so many factors favoring growth, how could value regain its edge? The government's steps to ease the credit crunch could lift battered financial stocks, and the value category.

Value also could benefit from changed investor thinking. The recent market slump has left many wary of growth stocks' risks, and searching for the bargains.

Investors "have a more jaundiced view," said Jonathan Vyorst, manager of the Paradigm Value Fund (PVFAX). "The good part is that stocks in almost every area ¿ whether it's technology, or industrials, or financials ¿ are very, very cheap. And for a value manger, that presents a good opportunity."

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