S&P review finds growth funds outperforming

Over the three years to January, growth funds achieved annual returns of between 11.09 per cent and 18.94 per cent, against a median return in the broader international equity universe of 8.81 per cent, according to a Standard & Poor’s International Equities — Growth review.

It also found that over the five years to January this year, the growth funds achieved returns of between 4.91 per cent and 11.41 per cent, against a median return of 5.27 per cent from the same universe.

It found the S&P/Citigroup BMI World ex Australia Index Growth outperformed the S&P/Citigroup BMI World ex Australia Index Value over the 12 months to December 2007.

However, over the three, five, and 10-year periods to December this year, it found the S&P/Citigroup BMI World ex Australia Index Value has outperformed.

The findings suggest the “performance of sectors and stocks that are less sensitive to economic slowdowns, or those that have attractive growth opportunities, will be stronger than the broader market performance,” S&P fund analyst Justine Gorman said.

“When the economy is accelerating value stocks tend to be favoured, and when the economy is decelerating growth stocks with stable earnings tend to be in favour, as earnings growth becomes scarce,” she said.