Time for a Rotation?
Chart of the Week for May 26-June 1, 2000
The chart above shows that the growth and value styles of investing cycle in and out of favor over time. The blue bars indicate periods in which the growth subset of the S&P 500 Index has outperformed; the red bars show when value has been the favored style.
What we know for sure is that one particular segment will not remain the popular trend forever. What we don’t know is when this change, or “rotation,” will occur.
Because growth stocks and value stocks will demonstrate different behavior patterns, the sensible retirement investor allocates portions of his portfolio to both segments. That way when one group is underperforming, the other will hopefully counterbalance it. This is an excellent way to reduce risk in a portfolio.
How do I know if my portfolio is diversified? Take a look at fund descriptions and investment objectives. Look for these clues:
| Growth | Value |
|---|---|
| Rapid growth of earnings and sales | Slower growth of earnings and sales |
| Higher P/E and P/B ratios | Lower P/E and P/B ratios |
| Little or no dividends (instead, profits are reinvested) | Higher dividend yields |
The Vantagepoint Funds are designed with investment objectives in mind, rather than specific investment styles. Therefore, each fund incorporates both growth and value approaches in pursuit of the fund’s objective. This makes the Vantagepoint Funds especially suitable for retirement investing.
This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing. Investment information can change rapidly and the changes can be significant particularly in volatile markets. For this reason “as of”’ dates are provided for specific data where applicable. The information should not be considered current after the dates provided.
Please read both the current applicable prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights, investment objectives, risks and performance information. Investing in mutual funds and other investment vehicles involves risk, including possible loss of the amount invested. Investors should carefully consider the Fund's investment objectives, risks, charges and expenses before investing or sending money. The prospectus contains this and other information about the investment company. The Vantagepoint Funds are distributed by ICMA-RC Services LLC, a wholly owned broker-dealer subsidiary of ICMA-RC and member FINRA/SIPC. For a current prospectus, contact ICMA-RC Services, LLC.
The performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240. Para asistencia en Español llame al 800-669-8216. Performance data current to the most recent quarter end is available by visiting www.icmarc.org.