Value Stocks Reach Historic Lows Compared to Growth Stocks Amid COVID Outbreak

Vanguard's Capital Markets Model research team suggests that investors consider switching from growth stocks to value stocks, as the relationship between the two is currently at an extreme level similar to that seen in 2020. Vanguard defines value stocks as those with lower prices, lower growth rates, and higher dividend yields. Historical data shows that value stocks tend to outperform during economic recoveries. With the Federal Reserve potentially engineering a soft landing and the economy expected to accelerate, an overweight to value stocks could help offset low broad-market returns in the next decade.