Capital Markets: Observations & Insights

Large Cap Growth is Inexpensive Relative to Large Cap Value ​ Growth vs. Bond-like Equities

• Large cap growth has historically been at a ~40% P/E premium to large cap value but it is now only a 16% premium • Russell 1000 Growth is trading at P/E-to-growth of 1.4x vs. the Russell 1000 Value at 2.5x, which is the largest gap in over a decade

Russell 1000 Growth vs. Russell 1000 Value P/E NTM

2.40

2.20

Median ~40% Premium

2.00

1.80

1.60

Current 16% Premium

1.40

1.20

1.00

Jan-79

Jan-81

Jan-83

Jan-85

Jan-87

Jan-89

Jan-91

Jan-93

Jan-95

Jan-97

Jan-99

Jan-01

Jan-03

Jan-05

Jan-07

Jan-09

Jan-11

Jan-13

Jan-15

Source: FactSet, Bank of America as of 06/30/2016.

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