Since the U.S. stock market crash of 2008, growth stocks have outperformed value stocks by a wide margin. Figure 1 presents the performance of US Large Cap Growth and Value stocks as measured by the Russell 1000 style indexes and compares them to the performance of the S&P 500 Index.
Figure 1. US Large Cap Styles: Cumulative Total Returns, January 2008 Through December 2024
| Period | Russell 1000 Growth Index (%) | Russell 1000 Value Index (%) | Russell 1000 Index (%) | S&P 500 Index (%) |
| 1 Year | 33.4 | 14.4 | 25.9 | 25.0 |
| 3 Years | 34.8 | 17.9 | 26.9 | 29.3 |
| 5 Years | 138.3 | 51.6 | 94.2 | 97.0 |
| 10 Years | 371.5 | 125.8 | 234.3 | 242.5 |
| Entire Period: 17 Years | 729.9 | 249.7 | 454.1 | 459.8 |
In 2024 alone, large growth stocks as measured by the Russell 1000 Growth Index (R1K Growth) outperformed large value stocks as measured by the Russell 1000 Value Index (R1K Value) by 19%. And over the entire 17-year period (2008 through 2024), the R1K Growth experienced more than an eight-fold increase (729.9%) but the R1K Value only grew around 3.5 times (249.7%).
A better way to gauge the persistent dominance of growth over value in the last 17 years (a period of 204 months), is by comparing the three-year rolling returns of the R1K Growth and the R1K Value Indexes, a period that includes a total of 168 rolling returns (204 months – 36 months). Growth stocks prevailed in 144 of these 168 time periods (86%), clearly showing how the three-year growth premium for large stocks was greater than the three-year value premium. Additionally, in the 144 periods in which large growth stocks outperformed large value stocks, they did so by an average three-year cumulative return of 22.1%, whereas in the 24 periods that the large value stocks outperformed large growth stocks, they did so by an average three-year cumulative return of only 3.7%. Figure 2 presents the difference (spread) in the growth and value returns for the three-year rolling returns. Notably, the spreads are highly asymmetrical in favor of large growth stocks over large cap value stocks, at least as defined by the Russell style benchmarks.
Figure 2. Russell 1000 Growth vs. Russell 1000 Value: Cumulative Three-Year Return Spreads, January 2008 – December 2024
The large disparity in the performance of the Russell Style benchmarks for large cap equities since the Global Financial Crisis (GFC) has led more than a few growth investors to suggest that value investing is dead. Indeed, if one were to believe that the Russell style benchmarks are accurate measures of the underlying styles, it would be natural to arrive at such a conclusion. However, at MarketGrader we believe that these broad style benchmarks are not accurate measures of the growth and value equity opportunity sets. We believe that our passive, rules-based and transparent style indexes, purposely built on growth at a reasonable price (GARP) stock selection, deliver the inherent performance of the US large cap asset class while providing better exposures to the equity styles. Figure 3 presents the performance of the MarketGrader U.S. Large Cap Style Indexes.
Figure 3. MarketGrader US Large Cap Style Indexes: Cumulative Total Returns, January 2008 Through December 2024
| Period | MarketGrader US Large Cap Growth (%) | Russell 1000 Growth Index (%) | MarketGrader US Large Cap Value (%) | Russell 1000 Value Index (%) |
| 1 Year | 32.4 | 33.4 | 22.4 | 14.4 |
| 3 Years | 29.5 | 34.8 | 38.7 | 17.9 |
| 5 Years | 116.0 | 138.3 | 96.3 | 51.6 |
| 10 Years | 285.8 | 371.5 | 247.1 | 125.8 |
| Entire Period: 17 Years | 551.0 | 729.9 | 497.9 | 249.7 |
In 2024, the MarketGrader US Large Cap Growth Index returned 32.4% underperforming the Russell benchmark by 1%. However, the MarketGrader US Large Cap Value Index, which returned 22.4%, outperformed the Russell benchmark by 6%. Similarly, over the entire 17-year period (2008 through 2024), the total cumulative return of the MarketGrader US Large Cap Growth Index of 551.0% underperformed the Russell growth benchmark by 179%, while the MarketGrader US Large Cap Value Index, with a total cumulative return of 497.9%, outperformed the Russell value benchmark by a whopping 248%.
For readers who might want to verify that the MarketGrader US Large cap style benchmarks are delivering the exposure to the growth and value styles and not “jumping” styles to chase returns, Figures 1A and 1B in the Appendix present the 36-month rolling correlations for the MarketGrader Indexes with the Russell style benchmarks. The figures confirm that a high correlation exists between the MarketGrader Large Cap Style Indexes, and their respective Russell Large Cap Style counterparts.
Figure 4. MarketGrader’s US Large Cap Growth vs. US Large Cap Value: Cumulative Three-Year Return Spreads, January 2008 Through December 2024
Figure 4 presents the cumulative three-year rolling returns difference between the MarketGrader US Large Cap Growth and Value Indexes. Notice the better symmetry in the spreads between both indexes and the tighter range between the highs and lows in comparison to the spreads for the Russell Growth and Value Indexes depicted in Figure 2.
Based on the comparison in three-year rolling returns between both MarketGrader Large Cap Style Indexes in the last 17 years (204 months), it is clear that while growth outperformed value much as it occurred with the Russell benchmarks, there is much greater balance between the two styles based on GARP stock selection. The MarketGrader Large Cap Growth strategy prevailed in 94 of the 168 time periods measured (56%), while the MarketGrader Large Cap Value strategy prevailed in the remaining 74 periods – a more symmetrical style outcome. Furthermore, in the 94 periods that MarketGrader large cap growth outperformed the MarketGrader large cap value strategy, it did so by an average three-year cumulative return of 10.5%. But in the 74 periods in which the MarketGrader large cap value strategy outperformed the MarketGrader large cap growth strategy it did so by an average three-year cumulative return of 8.3% – also a more symmetrical style outcome.
The Role of Stock Selection In MarketGrader’s U.S. Style Indexes
MarketGrader evaluates daily over 41,000 stocks across virtually all global markets using a 24-factor methodology. These 24 indicators, or measures of fundamental strength, are divided into four categories: Growth, Value, Profitability and Cash Flow. The first two constitute the “GARP” (growth-at-a-reasonable-price) part of our analysis, while the other two constitute the “Quality” part of the analysis. A balanced blend of the four (though not equally), results in our overall grade, calculated on a 100-point scale.
As part of this daily evaluation, MarketGrader also calculates two additional grades for all companies in our equity universe. The first is a MarketGrader Overall Growth Grade, in which we overweight the growth indicators and underweight the value indicators, and a MarketGrader Overall Value Grade in which we do the opposite. In both of these, by the way, the 12 quality factors retain the same weight as in the MarketGrader “balanced” overall grade. Said differently, quality is never underweighted in any of our methodologies. These two additional growth- or value-leaning grades allows us to map all stocks into growth or value cohorts, within particular equity universes, such as U.S. large caps in this case. This results in a more dynamic methodology for mapping growth and value stocks globally than used by Russell or other broad benchmarks, which divide a fixed universe of companies based on static measures of growth and value.
After excluding all stocks with a MarketGrader Overall Grade of less than 50 (low quality companies based on fundamentals), MarketGrader uses the standardized versions of the raw MarketGrader Growth and Value grades to map half of the remaining universe (all good quality companies based on financial fundaments) into growth stocks and the other half into value stocks. Finally, MarketGrader selects the largest 100 stocks from growth and value stocks each to calculate the MarketGrader U.S. Large Cap Growth and Value Indexes.
Implications for US Large Cap Blended Style-Neutral Portfolios
The S&P 500 Index, the most widely used benchmark for U.S. large cap equities is a style-neutral portfolio of stocks that equally blends U.S. large cap growth and value stocks. To illustrate this point consider the cumulative total returns of the Russell 1000 style benchmarks and S&P 500 over the last 17 years (2008 through 2025) as presented in Figure 5.
Figure 5. MarketGrader U.S. Large Cap Indexes: Cumulative Total Returns, January 2008 Through December 2024
| 2008 Through 2025 | Cumulative Total Return | Annualized Total Return |
| Russell 1000 Growth | 729.9% | 13.3% |
| Russell 1000 Value | 249.7% | 7.6% |
| 50/50 Growth Value (average) | – | 10.4% |
| S&P 500 | 459.8% | 10.7% |
| MG US Large Cap Growth | 551.0% | 11.6% |
| MG US Large Cap Value | 497.9% | 11.1% |
| 50/50 Growth Value (average) | – | 11.5% |
| MG US Large Cap 100 | 545.5% | 11.6% |
Over the period under consideration, the total annualized return of the Russell 1000 Growth benchmark was 13.3% while that of the Russell 1000 Value benchmark was only 7.6%. A 50/50 portfolio of both the Russell style benchmarks (rebalanced annually) would have generated a total annualized return of 10.4% (which is the average of the annualized returns). Notice, the S&P 500 delivered a total annualized of 10.7% (which is very close to the average) meaning it may have had a very small growth bias over this period.
Also notice that any U.S. large cap active manager that overweighted the growth benchmark would have outperformed the S&P 500. For example, a 60/40 portfolio of the Russell 1000 Growth and Value indexes would have generated an annualized return of 11.0%, outperforming the S&P 500 by around 30 basis points annually. A 70/30 portfolio of the Russell 1000 Growth and Value indexes would have generated an annualized return of 11.6%, outperforming the S&P 500 by around 90 basis points annually. Of course, this outperformance would have depended on making a sizable style bet in favor of growth back in 2008, and sticking with it over 17 years that included multiple interest rate regime changes, a global pandemic, and several market corrections. In hindsight, it would have worked beautifully; but will it do the same going forward?
Rather than trying to predict the relative performance of the growth or value style in the future, investors should ask instead: Is it possible to outperform the style-neutral S&P 500 blended portfolio without taking a huge style bet? The answer is absolutely. That is one of the major reasons for constructing passive U.S. equity style portfolios that are more symmetrical in terms of performance over the long-run and with smaller return spreads over the shorter-run. Consider a 50/50 blend of the MG U.S. Large Cap Growth and Value portfolios. Such portfolio, rebalanced annually, would have delivered a total annualized return of 11.5%. In fact, MarketGrader’s flagship U.S. Large Cap 100 Index – a style-neutral blended portfolio, delivered a total annualized return of 11.6%. Recall, this is akin to an active manager taking 70% bet on growth stocks to outperform the S&P 500 annually by 90 basis points. MarketGrader’s style-neutral indexes did so without the need for perfect foresight.
Appendix
Figure 1A. Three Year Rolling Correlations, MarketGrader & Russell Large Cap Growth Indexes
Figure 1B. Three Year Rolling Correlations, MarketGrader & Russell Large Cap Value Indexes
