Explore
the Value in Value Investing
The
Vanguard Group
July
1999
Why
is it smart to hold value funds? Value-oriented stocks are the companies
that, given their assets and earnings history, are attractively priced.
Perhaps that's because they are out of favor or because investors have
low expectations for tehm. These companies often pay above-average dividend
yields. Growth funds, on the other hand, look for companies that, due to
their strong earnings and revenue potential, offer above-average prospects
for capital growth. Although growth stocks ahve outperformed value stocks
in recent years, they do create more risk. Re-evaluating the benefits of
value investing makes sense and ensures adequate divisification.