Capital Markets: Observations and Insights Autumn 2019

​ Style Divergence

STYLE WARS

Growth and Value Near Equilibrium

• Despite their outperformance over the past several years, Growth stocks are not very expensive compared to their Value equity counterparts relative to expected growth rates or history

Russell 1000 Growth vs. Russell 1000 Value PEG Ratio (P/E Divided by Long-Term Growth Rate)

Russell 1000 Growth Relative to Russell 1000 Value P/E

225%

200%

1.8x

175%

150%

Growth stocks are cheaper relative to long-term growth

125%

1.5x

100%

Value is Attractive

Median: 40%

75%

51%

50%

25%

Growth is Attractive

0%

Russell 1000 Value

Russell 1000 Growth

1979 1984 1989 1994 1999 2004 2009 2014 2019

Source: FactSet, Bank of America as of 9/30/19. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

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