Value stocks get the upper hand

Growth investing has ceded ground to value investing in the US, with many growth investors taking their lumps, especially in smaller stocks

IN 2013, the Buffalo Emerging Opportunities fund returned a stunning 61.7 per cent. Lipper, which tracks mutual funds, named it the best small-capitalisation growth fund over the previous three and five years, and investors stormed in. It began 2013 with just US$66 million in assets and attracted US$380 million in new money for the year.

But in the first half of this year, even after a June rebound, the fund was down 6.66 per cent, badly trailing the Standard & Poor's 500-stock index, which had total returns, with dividends, of 7.14 per cent. The fund also had net outflows of US$97.6 million.

The portfolio manager, John Bichelmeyer, is philosophical about the reversal. "It's a healthy correction,"...

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