Growth Funds Expected to Make a Comeback in 2005

Value funds have beaten their growth rivals in the past four to five years, but growth funds may rebound amid stronger economic performance, low inflation, rising employment and increasing capital investments, according to Investor's Business Daily.

Since the 70's, growth stocks, which are stocks with above-average earnings that tend to do well during a bullish market, have lost to value stocks three years in a row only twice, between 1992 and 1994, and between 2000 and 2002.

Growth funds, which returned 35.17% on average in 2003 compared to the 33.55% value funds averaged, are set to make a comeback, analysts say. If oil prices drop, value funds will become less attractive. Also, improved tech earnings could enhance prospects for growth stocks.

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Money Management Executive
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