As you’ve heard, it’s five years since the devilish bottom in the market and it’s been pretty much all up from there. So, how have the four corners of the equity style box done over that time?
Here’s one firm’s efforts. The firm is Wilshire, home of the 5000, the most complete U.S. index. (It rose 207% during the five years; the retail index fund for it trades under the ticker WFIVX.)
What I didn’t know is that the firm’s style/market cap funds aren’t indexes, as I expected, but multi-manager funds, with two managers for each of the small cap funds and three managers for the large cap ones.
The firm’s beginnings were in the investment consulting world, so selecting managers has been something it’s done for four decades. Still, the description of its manager research process looks the same as what you see on every other firm’s site.
In any case, look at the chart above. Large growth (DTLGX) has been the laggard by a good long way. Large value (DTLVX) has been better. The neck-and-neck winners have been the small stocks, with value (DTSVX) slightly beating out growth (DTSGX).
By the way, the funds are amazingly small (just over $500 million in total) for having been around more than twenty years.
Performance chasing being what it is, the small stocks are being pushed hard right now, reaching historic premiums in terms of valuation. Now’s the time to examine your investment beliefs, especially the item about your preference for momentum over mean reversion. Which corner(s) do you want to be in? (Chart: Bloomberg terminal.)
Speaking of manager evaluation, I have some due diligence questions for you.