I have a genuine question, I am a noob at stocks. from what I have been reading value investors get higher returns than growth investors but then how come the growth etf IVW gets much higher returns than the value index fund VTV. I've looked at other value ETF's but they sucked even more. Is value investing worth the hype or are these ETF's just bad. If professionals can't do good value investing what chance do we have? Is this a skill worth spending my time in?

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  • 6
    To make money investing, you have to be right more than you are wrong; to make more money than an index fund, you have to be right more than the market average. It's not impossible, but it's also not guaranteed; it's essentially gambling. Commented Aug 23, 2022 at 20:56
  • "how come the growth etf IVW gets much higher returns than the value index fund VTV" — Related: Why is there a distinction between growth and value investing, when growth is part of value?. Read the answer by Martin Dawson: money.stackexchange.com/a/140265
    – Flux
    Commented Aug 24, 2022 at 8:01
  • Where did that chart come from? Does it include reinvestment of dividends?
    – jjanes
    Commented Aug 24, 2022 at 14:04
  • @user253751 "To make money investing, you have to be right more than you are wrong;" Not really, you are talking about trading. You can invest by sticking everything in an index fund and leaving it. The S&P 500 has averaged over 11% pa since 1957.
    – Dave Smith
    Commented Aug 24, 2022 at 14:12
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    @DaveSmith That's not a counter. Since you're only making one decision (the choice of index), and that one decision has to be right.
    – Barmar
    Commented Aug 24, 2022 at 17:07

2 Answers 2


"Value investing" is essentially looking for stocks that are cheaper than they "should be" by some measure. That ETF tracks an index of large cap value stocks, which may skew the results somewhat, since there may be more smaller "value" stocks that perform better than larger ones.

Also note that the two were largely in sync until mid-2018 and mid-2020, where large tech stocks (which are more "growth" than value) dominated from COVID lockdowns (there are many other factors, but that's a significant one).

And note that this year, VTV has outperformed IVW - the value fund is only down 5% while the growth fund is down 18%. So it may be an anomaly that growth has outperformed over the period you're looking at.

If you're a "noob at stocks" then it's best to stick with very broad index funds until you understand more the risks associated with different styles of funds, and slowly move to individual stocks. There's no way to ensure that you pick the "best fund" or even the best strategy going forward.

As a young kid, you have plenty of time to make mistakes and learn from them. Don't try to "get rich young" (you might get lucky and do that, but more than likely you'll lose more than you win). Play the long game, save as much as you can, watch it grow, and as you grow you can set aside portions of your portfolio (say 10%) to experiment with individual stocks or other strategies.

  • I'd just say that growth stocks are more volatile and thus move more in one direction in every market condition.
    – Jimmy T.
    Commented Aug 24, 2022 at 15:47

Value investing and value stocks are somewhat different.

Value investing is, like D Stanley says, figuring out what stocks are cheaper than they should be. Warren Buffet does this by reading public financial statements / disclosures that are required to be made available by law.

Value stocks are stocks that make more consistent income, often have dividends, but aren't growing or innovating that much compared to growth stocks.

Over the past decade or two, value stocks haven't done that well compared to growth stocks. This may or may not change in the future. At least part of the reason is extremely low interest rates set by the Fed. When borrowing money is cheap, companies that have growth potential can borrow to expand / capture the market and then have time to make a profit.

If people believe the Fed will continue raising rates, growth stocks will go down. Once they think the Fed is going to start lowering rates, growth stocks will go back up. This is assuming other factors stay the same.

If I were you, I'd start investing mostly in a broad index fund like VOO and I would leave a bit that I could afford to lose and experiment with value investing (which doesn't have to be investing in value stocks) while learning about it. The Intelligent Investor and Security Analysis are two well respected books about how to do value investing.

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