Growth Funds Beat out Value Funds in 2005

January 9, 2006 ( - Growth funds edged past value funds for the first time in five years in 2005.

In both the US and abroad, growth outperformed value, with most growth funds’ gains coming in the second half of the year, according to USA Today.   The one exception was US small-cap value funds which gained 6.1% last year, modestly beating growth funds’ rise of 5.7%.

USA Today reports that, overall US growth funds rose 7.5% in 2005, compared with a 6.6% increase in value funds, according to Lipper.   The average diversified US stock mutual fund rose 6.6% last year.

In the US, mid-cap growth funds recorded the greatest gains in 2005 of 9.8%.

Speculating for 2006, 80% of investment managers surveyed by Russell Investment Group feel US large-cap growth stocks will rebound next year, with technology and health care sectors leading the way.   After pulling money out of poorly performing large-cap growth funds in the past five years, investors started putting some back toward the end of 2005.

The Financial Research Corporation reported that large-cap growth funds received $5.2 billion in net inflows in October and November, while inflows to large-cap value funds slowed.   However, outflows from large-cap growth funds totaled $8.7 billion in the first 11 months of 2005.