Chart of the Week

10-Year Annualized Return Decomposition

Growth stocks’ outperformance versus value over the past decade has been driven by multiple expansion

14 December 2023

While value stocks (MSCI ACWI Value) have underperformed growth (MSCI ACWI Growth) for the past decade, dividends of value stocks have been slightly stronger than that of growth stocks.


  • Chart of the Week

    Brandes International Equity performance relative to the MSCI EAFE Index and international value peers across different performance environments

    We believe Brandes International Equity is well positioned as a complement to growth exposure given our performance versus the value peer median in pro-value markets (when MSCI EAFE Value outperformed MSCI EAFE).
  • Chart of the Week

    Subsequent Relative Return of International Value Stocks (MSCI EAFE Value) vs. Growth Stocks (MSCI EAFE Growth) across Valuation Quintiles.

    We ranked the price/book of international growth and value stocks for each quarter going back to 1974 and divided the results into quintiles. During quarters when the P/B of value stocks was less expensive (i.e., discounted) relative to the P/B of growth stocks, value stocks tended to outperform over the subsequent 5-year period. The greater the discount, the greater the outperformance.
  • Chart of the Week

    Global Return Decomposition by Fundamentals and Multiple Expansion

    While value stocks (MSCI ACWI Value) have underperformed growth (MSCI ACWI Growth) for the past decade, the fundamental returns (earnings growth and dividends) of value stocks has been slightly stronger than that of growth stocks.
  • Chart of the Week

    Global Return Contribution by Sector

    Despite their pullback in 2022, technology stocks have contributed more to global equity returns (MSCI ACWI) than their average index weight over the last 5 years. While, more typical value sectors such as financials have contributed less than their index weight.
  • Chart of the Week

    Are International Equities Going to Outperform U.S. Equities?

    Even after their outperformance so far in 2023, international stocks (MSCI EAFE) continue to trade at an appealing discount relative to U.S. stocks (MSCI USA) as of June 30. Such discount levels have historically preceded positive relative returns for international vs. U.S. stocks, indicating—in our opinion—that now may be a good time to allocate to international equities.
  • Chart of the Week

    U.S. Dollar and International Equities

    U.S. dollar strength in the past decade, combined with U.S. stocks’ robust performance, had led some investors to be wary of investing in companies outside of the United States. However, after hitting a high in September 2022, the U.S. dollar started to tumble against a basket of foreign currencies. Historically, weakening U.S. dollar has been positively correlated with the outperformance of international stocks (MSCI EAFE) vs. U.S. stocks (MSCI USA). As such, we believe now is an opportune time for investors to consider international equities.
  • Chart of the Week

    Finding Value Outside the U.S.

    International equities (MSCI EAFE) outperformed their U.S. counterparts (MSCI USA) for the year through March 31, 2023. Amid this outperformance, we continue to believe the asset class remains a fertile ground for value opportunities, with higher average dividend yield and more companies with earnings yield of over 8% compared to the U.S. equity asset class.
  • Chart of the Week

    U.S. Companies’ Exposure to International Revenues

    While many U.S. companies do derive a portion of their revenues from abroad, we believe investors may benefit from a dedicated allocation to international equities. As U.S. businesses overall trade at a premium relative to their non-U.S. peers (based on forward price/earnings), investing in U.S. companies may not be the best way to access international opportunities from a price standpoint.
  • Chart of the Week

    Value Managers Scarcity

    From stubbornly elevated inflation to persistently high discount levels for value stocks (vs. growth stocks and the broader market), we believe the current investing environment is supportive of an allocation to value management. After a prolonged growth-led cycle, however, finding a true value asset manager might not be as simple as it appears. Morningstar classified global equity large-cap funds with more than $100 million in assets under management (AUM) by exposure to what it considers value securities. It found that only 8% of the category’s AUM was in funds with more than 35% exposure to value securities, while 71% of AUM was in funds with less than 25% exposure to value securities.
  • Chart of the Week

    Value Stocks Relative Valuations

    From 9/30/20 to 12/31/22, the MSCI World Value Index outperformed the MSCI World Growth Index by 37.1% cumulatively.[1] Nevertheless, this outperformance did little to narrow the historically wide gap between the valuations for value stocks and those for growth stocks. At the end of this period, value stocks continued to trade at high levels of discount vs. growth stocks across various valuation metrics, indicating—in our opinion—that there is still a positive outlook for value.
  • Chart of the Week

    Value and Growth Cycle Duration

    We believe that after a decade of lackluster performance, the recent performance of value stocks (MSCI World Value) has been remarkable. It has also raised the question: Is it too late to tap into the potential of this style factor?
  • Chart of the Week

    Higher Rates: Potential Catalysts for Value?

    As value stocks have historically done well during periods of elevated interest rates, we believe now is an opportune time for investors to consider an allocation to this investing style.
  • Chart of the Week

    Market Cycles: The Case for Asset Allocation

    Because markets historically move in cycles, with some asset classes having outperformed others one year and then underperforming them the next, diversification could help reduce the volatility of a portfolio’s returns.