Growth vs Value Investing: How Do the Styles Differ, and Why Blend Them?
Erik James Roberts — Founder & CIO, Infinitus Wealth Management. Purple Heart recipient, Wharton MBA.
Updated September 9, 2026
Growth vs value investing describes two ways of deciding what a business is worth today: growth focuses on how fast a company's earnings and revenue are expanding, while value focuses on what you pay for the earnings a company already produces. Neither style is permanently better, and both have led the market for long stretches. We treat them as two engines on the same aircraft rather than a choice between camps, and we build them together into one custom portfolio of individual stocks and bonds.
That framing matters more in 2026 than it has in years, because the labels themselves have moved. At the June 2026 Russell reconstitution, Apple and Microsoft, both previously classified entirely as growth, became notable additions to the Russell 1000 Value Index, with Apple landing at 46% value and Microsoft at a 50/50 split. Amazon moved to 92% value, against 27% value a year earlier, while Alphabet and Advanced Micro Devices went to 100% growth. If a single reconstitution can move the largest companies in America from one style bucket to the other, then owning a style label is a very different thing from owning a business.
What is a growth stock?
A growth stock is a company whose revenue and earnings are expanding faster than the broader market, and whose share price reflects an expectation that the expansion continues. These businesses typically reinvest cash into capacity, research, and market share rather than paying it out as dividends. Investors accept a higher multiple of current earnings in exchange for a claim on much larger future earnings.
The practical signature of growth: high price-to-earnings and price-to-book multiples, low or no dividend, heavy concentration in technology and AI-adjacent sectors, and larger price swings in both directions.
What is a value stock?
A value stock trades at a modest price relative to the earnings, book value, or cash flow the business already generates. The tradition runs from Benjamin Graham forward, and the logic is a margin of safety: you are paying less for each dollar of current profit, which gives you a cushion if the business disappoints and an upside if the market re-rates it.
The practical signature of value: lower multiples, a higher dividend yield, and a much wider sector spread across financials, energy, healthcare, industrials, utilities, and consumer staples.
How growth vs value investing styles differ in practice
Four differences do most of the work.
Price paid for earnings. As of January 1, 2026, growth stocks carried a trailing price-to-earnings ratio of 39.32 and a forward P/E of 29.15, while value stocks sat at 22.12 trailing and 17.73 forward, measured on the Russell 1000 Growth and Russell 1000 Value indices. That spread entered 2026 at its widest since the peak of the dot-com period in the early 2000s. There is no fixed multiple that makes a stock “value,” which is why we compare a company to its own history and its own sector rather than to a single threshold.
What the company does with its cash. Value businesses tend to return cash through dividends and buybacks. Growth businesses tend to reinvest it. That single choice drives most of the difference in how the two styles behave for an investor drawing income.
Sector concentration. Growth indices lean heavily on technology and the companies feeding the AI build-out. Value spreads across a much wider set of industries. An investor holding a large growth allocation may hold far more concentrated sector risk than the label suggests.
What makes each one lead. Growth tends to lead when rates are falling, liquidity is ample, margins are expanding, and investors are willing to pay ahead for future earnings. Value tends to lead when rates rise, when economic activity broadens beyond a handful of leaders, and when investors become sensitive to what they are paying.
Why the labels moved in 2026
Style classification is a methodology, not a fact about a business. Russell evaluates each company using book-to-price for value characteristics and a combination of medium-term earnings growth forecasts and historical sales-per-share growth for growth characteristics, then calculates a style probability. Companies with mixed traits get their market capitalization split across both indexes rather than assigned to one. Different index providers use different metrics, so the same company can be growth in one benchmark and value in another.
This is not a minor technicality. Russell US Style Indexes account for roughly two-thirds of the $12.2 trillion benchmarked to Russell US Indexes. A large share of American equity money is allocated by a rule that just reclassified Apple, Microsoft, and Amazon.
Our takeaway is simple and it is the core of how we invest: we underwrite companies, not categories. When you own individual securities directly, a reconstitution does not change what you own. It only changes what somebody else calls it.
Has growth or value performed better?
Both, in turn, which is the whole point.
Over long horizons, academic work in the Fama-French tradition has found a modest historical edge for value, alongside long stretches where that edge disappears. Over the last fifteen years, growth has led decisively. Through January 2026, the Russell 1000 Growth ETF had gained roughly 90% over the prior five years against roughly 60% for the Russell 1000 Value ETF.
Then 2026 arrived. Large value outperformed large growth by more than 11 percentage points in the opening weeks of the year, a margin that reads as a leadership shift rather than routine volatility. Value has led year to date on a mix of elevated volatility, a move away from mega-cap concentration, and a broadening of AI investment into infrastructure-linked sectors like industrials. By late June, the Vanguard Value ETF was up 14.4% year to date while the Vanguard Growth ETF had returned 1.8%.
Past performance does not guarantee or indicate future results, and index returns are not available for direct investment. The figures above are historical index and fund data, presented to illustrate the pattern of rotation rather than to forecast it.
Style leadership cycles have historically run for years rather than quarters, which produces the behavior gap that costs investors the most: concentrating in whichever style just won, then rotating out after it turns. A portfolio that already carries both engines removes the need to make that call under pressure.
Why we blend growth vs value investing at Infinitus
We are a fee-only independent fiduciary RIA in Nashville, and we build every client portfolio from individual stocks and bonds rather than mutual funds. That structure is what makes a genuine blend possible, for four reasons.
We can own the business, not the bucket. Apple at a 54/46 growth-value split is one company with one balance sheet. Owning it directly means we hold our own view of its earnings power and the price we are paying for it. We are not obligated to buy or sell it because a benchmark reclassified it in June.
Our 12 strategies are already built along this axis. Large-Cap Growth Equity, Technology-Focused Growth, and Small- & Mid-Cap Growth express the growth engine. Stable Value Equity and Dividend Income Growth express the value and income engine. Balanced Growth Equity and Risk-Controlled Growth sit deliberately across both. Tax-Exempt Municipal Bonds and U.S. & Global Bonds provide the ballast underneath. These are building blocks, and each client receives one custom portfolio assembled from the blocks that fit their situation, not an off-the-shelf model.
The blend is adjustable at the security level. When the valuation spread between the two styles reaches an extreme, we can lean the portfolio without abandoning either engine, and we can do it position by position. That is a meaningfully different tool than swapping one fund for another.
Direct ownership improves the tax picture. Holding individual securities means gains and losses are realized position by position rather than passed through to you from a pooled fund's internal trading. Coordinating that well is one of the quieter advantages of the structure. Your CPA remains the right party for filing decisions, and we work alongside them.
What blending looks like in a real portfolio
Blending is not splitting a portfolio down the middle and forgetting about it. In practice it means three things.
First, we set the mix from your situation rather than from a market forecast: your time horizon, your income needs, your tax posture, and what you already hold elsewhere, including concentrated stock from an employer or a business sale.
Second, we look through the labels. If a client already holds a large position in a single mega-cap technology company, the real question is total exposure to that business and its sector, regardless of which style index currently claims it.
Third, we rebalance with intent. Rotations create opportunities to trim what has run and add to what is underpriced, on a schedule and with tax-awareness, rather than in reaction to a headline.
If you would like a second read on how your current portfolio splits between the two engines, we are glad to look at it with you. If your situation calls for professionals we do not provide in-house, including an estate attorney, a business broker, or a CPA, we can introduce you to people we know and trust.
Common Questions About Growth vs Value Investing
Is value investing better than growth investing?
Neither is better in all environments. Long-run academic data shows a modest historical edge for value, while the past fifteen years favored growth by a wide margin, and 2026 has favored value again. Because leadership rotates on multi-year cycles, holding both engines is a more durable answer than choosing one.
What P/E ratio makes a stock a value stock?
There is no fixed number. For scale, at the start of 2026 the Russell 1000 Value Index carried a forward P/E near 17.7 against roughly 29.2 for the growth index, but a utility at 18 times earnings and a software company at 18 times earnings are telling you very different things. We compare each company to its own history and its own sector.
Why did Apple and Microsoft move into the value index?
Russell recalculates style assignments annually at the June reconstitution using updated fundamental data, and both companies shifted from 100% growth to a blend, with Apple at 46% value and Microsoft at 50%. The businesses did not change overnight. The classification inputs did.
Can you own growth and value at the same time without diluting returns?
Yes. Owning both is not averaging away performance, it is holding two sources of return that respond to different conditions. The dilution concern usually comes from comparing a blended portfolio to whichever style just had its best run, which is a comparison available only in hindsight.
How long do growth and value cycles usually last?
Historically they run for years rather than quarters. Growth led for roughly fifteen years from the aftermath of the 2008 financial crisis, with a value interruption from late 2020 into 2022. Cycle lengths vary and are only identifiable after the fact, which is the argument against trying to time the turn.
How does Infinitus decide the growth and value mix for a client?
We start with your time horizon, income needs, tax situation, and existing holdings, then assemble a custom portfolio from our 12 strategies using individual stocks and bonds. All accounts are managed on a discretionary basis, and the mix is reviewed and adjusted as your situation and market valuations change.
Disclaimer
Infinitus Wealth Management is a registered investment adviser. This article is for informational and educational purposes only and does not constitute investment, tax, or legal advice, nor an offer or solicitation to buy or sell any security. No content here is a recommendation to buy, sell, or hold any particular security or to adopt any particular investment strategy. Any references to specific companies or indices are illustrative of the concepts discussed and are not recommendations. Index performance is historical, does not reflect the deduction of fees or expenses, and indices cannot be invested in directly. Past performance does not guarantee or indicate future results. All investing involves risk, including the possible loss of principal. Charts and figures shown are illustrative and hypothetical. Individual circumstances vary; consult your own tax and legal professionals before acting. Additional information about our services and fees is available in our Form ADV Part 2A.
