This article is a 360-degree analysis of the growth investment concept. Academics generally circumscribed it to a mere anti-value status. We show that growth-oriented stocks not only present the characteristic of being expensive and over-priced.
They can be found in any field, but tend to operate in newer and faster-growing industries that feature disruptive innovation. They are overrepresented in the United States and are not confined to a particular size segment. Growth stocks also have in common being related to all traditional equity risk factors. They are defined first as opposed to value but also have significant exposure to quality, volatility, dividend yield and momentum. And finally, they carry a significant amount of idiosyncratic risk. Therefore, we do not consider growth as to be an equity factor. From a macro-economic point of view, we find that growth strategies tend to perform well when inflation and long-term interest rates are at subdued levels, and when the yield curve is flat or sloping slightly upward.
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