Are value stocks finally taking the baton from growth?

There have been a lot of dropped handoffs over the past few years, but growth stocks finally look like they are passing the baton to value.

So should financial advisors believe this is the beginning of a brand new race, or simply another false start?

The iShares S&P 500 Growth ETF (Ticker: IVW) is down by over 5 percent year-to-date and 9 percent in the past month. Meanwhile, the iShares S&P 500 Value ETF (Ticker: IVE) is up over 2 percent so far in 2025 and essentially flat in the last month.

Of course, value’s IVE is only up 5.5 percent in the past year and 87 percent in the past five years, far underperforming the growth-tilted IVW’s 12 month return of 14.5 percent and 120 percent 5-year return.

As a result, wealth managers watching this delta widen of late have good reason to wonder if this “value spurt” is for real.

It’s still too early to say whether this latest shift toward value is a lasting trend or just temporary, according to Adam Reinert, chief investment officer & chief operating officer at Marshall Financial. In his view, growth-focused stocks are weighing on equities at this point, particularly compared to more value-oriented names.

“Nvidia (Ticker: NVDA), for example, has been one of the ultimate growth darlings over the past few years, trading at a multiple around 50 times forward earnings recently,” Reinert said. “Now, that’s come down to about 24 times future earnings. So, I can’t help but wonder: Do dip buyers step back in at some point, especially with multiples having been sharply cut for some equities over the past few weeks?”  

“But right now, there’s still so much uncertainty in present and future policy, and it’s hard to pinpoint a clear catalyst at present for a constructive rally in stocks,” Reinert said, adding that he has not made any direct changes in response to the current volatility.

Elsewhere, James "Louie" Humphries, managing partner at Mindset Wealth Management, admits that growth stocks, once “the market’s golden child,” are looking a little bruised, while value stocks, “the financial world’s equivalent of dad sneakers,” are making an unexpected comeback. That said, while this short-term rotation has sparked debate, he believes history suggests this may be more of a “market adjustment” than a lasting shift.

With the Fed keeping rates elevated, investors are reevaluating high-growth stocks that thrived on cheap capital, according to Humphries. IVW’s tech-heavy allocation (46 percent) and consumer discretionary exposure (16 percent) are more vulnerable to macroeconomic headwinds. At the same time, IVE’s larger exposure to financials (22 percent) and industrials (13 percent) provides stability in uncertain times.

“We’ve seen this movie before,” Humphries said. “In early 2022, rising rates hit growth stocks, while value stocks benefited from cyclical strength. A similar pattern may be emerging, though whether it’s a brief rotation or something more lasting remains unclear.”

The next phase depends on key catalysts—Fed policy, GDP growth, and sector earnings, Humphries said. As a result, investors may want to rebalance portfolios to maintain exposure to long-term growth while hedging with value.

“Growth’s edge hasn’t disappeared, but in a higher-rate world, adding stability might be the smart play,” Humphries said.

Moving on, Ron Piccinini, head of investment research at Amplify Technology, says it’s too early to call the move a passing of the baton. Right now he views it more as a “bout of random overperformance.”

“It could be the start of something new, but why would the market not prefer companies that grow over the long-term, if the price is right?” Piccinini said. “My sense is that growth stocks are the most widely held stocks and therefore get dumped first when people panic, but market sentiment is very volatile in general.”

Finally, Matt Liebman, CEO of Amplius Wealth Advisors, believes the market has entered what he refers to as “The Bull Market in Diversification.”

“Over the past 15 years, large cap U.S. growth stocks have significantly outperformed value stocks and most other investments,” said Liebman. “While we are not predicting a complete reversal, we believe the prudent course of action is to increase exposure to areas of the portfolio that have lagged behind large cap growth in recent years, including international stocks, small cap stocks, and value stocks.”