CHAPTER 11GROWTH AND VALUE INVESTING WITH ETFs

Growth and value-based (often referred to as style-based) ETF investing have become increasingly popular with investors. This has been driven by several factors. The first, as we mentioned in Chapter 9 on fundamental indexing, has been the work done by Professors Fama and French showing that value portfolios have higher expected returns (and correspondingly higher risk) than growth portfolios over the long term. Readers will notice the frequency with which the Fama-French model is mentioned in this book, and it’s largely because their work has been very influential in the financial advisor community. In the next chapter we will show through a case study how a reputed advisory firm uses this framework ...

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