March trading has seen the gap between the All Value and All Growth funds eclipse 0.60 on various days, marking the widest margin since late 2022 and early 2023.
Monday’s Daily Equity Report highlighted the recent deterioration in growth, represented by the Vanguard Growth ETF (VUG), along with continued improvements in value on a relative-strength basis and strong long-term trend indicators. To expand on the evidence of value’s improvement and current strength, the graphs below show the group score history of the All Value Funds and All Growth Funds on the Asset Class Group Scores page.
March trading has seen the gap between the All Value and All Growth funds eclipse 0.60 on various days, marking the widest margin since late 2022 and early 2023. This difference follows rarefied territory reached from early December through the end of January, when both groups scored above 4 for the first time in the groups’ roughly 22-year history. The recent resurgence of the All Value Funds group above the 4 threshold and into “blue sky” territory marks the first time in 19 years that the group has shown this level of superior trend and relative-strength characteristics.
The snapshot below shows the top 25 asset groups ranking above All Value Funds on the Asset Class Group Scores page and highlights some of the smaller groups contributing to All Value’s current stature. Looking back to prior instances in the mid-2000s when All Value scored above 4, there are loose parallels to the groups currently supporting All Value. Leadership from international equities, along with rising energy strength (both in domestic equities and commodities), are two notable themes, while strength in Utilities adds another level of commonality.
Looking at the group score history of the All Value Funds, there are five notable periods in which the group remained above the 4 threshold for more than a week. Across these periods, All Value scored above 4 for an average of 77 trading days—slightly more than a quarter, assuming roughly 250 trading days per year. The longest period ran from August 2006 to March 2007 (143 trading days), or a little over six months.
The tables below show the forward performance of the Vanguard Value ETF (VTV) and the iShares EAFE Value ETF (EFV) following the five periods referenced above, when the All Value group’s score eclipsed 4. Short-, intermediate-, and long-term performance for both funds was positive overall, with the 12-month window the only horizon that included a negative instance, which encompassed early 2008. Given that there are only a handful of observable periods when All Value is above 4, there is limited additional insight to draw beyond the loose parallels in leadership noted above.
Since moving above the 4 threshold on December 3 of last year, the All Value group has remained above the threshold for more than 70 trading days, just shy of the average noted above. Since early December, VTV and EFV have gained 3.09% and 3.85%, respectively, and are up 2.63% and 2.87% year to date. From here, the All Value Funds group would need to sustain a score above 4 for roughly another 73 trading days to surpass the longest streak (late 2006 to early 2007) and push the leadership trend further into rarefied territory.
