June 26, 2020
Investors commonly expect growth companies to provide the greatest long-term capital appreciation in their portfolios and expect value companies to provide capital protection, with appreciation. However, as noted in the chart below, our long-term analysis of the major US stock market indices shows that the Russell 2000® Value Index historically has provided the greatest long-term capital appreciation, with a cumulative return of 337% for the period from May 31, 2000 to May 31, 2020, outperforming the Russell 2000® Growth Index's return of 208% and the S&P 500® Index’s return of 217%.
Long-term capital appreciation
Source: Morningstar. Time period shown is May 31, 2000 to May 31, 2020.
Past performance does not guarantee future results.
Charts shown throughout are for illustrative purposes only and not meant to predict actual results.
Chart is for illustrative purposes and is not representative of the performance of any specific investment.
What this means for investors
The search for investment growth remains a central, critical goal for today's investors, but finding a reliable source to fuel portfolio growth can be a challenge, in our opinion. We believe there is a potential opportunity for the small-cap value asset class to provide that solution.