FYI: Traditional growth indices, designed as the inverse of value, have delivered negative excess returns and failed to provide faster growth in earnings per share (EPS). Active growth managers, who track growth indices, have likewise underperformed the market.
Companies that invest aggressively to grow assets and sales despite a low return on capital perform poorly, attributable to negative relative growth in EPS. Companies with a high return on capital and more disciplined growth strongly outperform, attributable to high relative growth in EPS.
A smart beta growth strategy, by investing in profitable companies with conservative investment practices, can diversify value strategies while delivering a strong positive excess return from sustainably faster growth in EPS.
Regards,
Ted
http://www.etf.com/sections/features-and-news/research-affiliates-smart-beta-sustainable-growth?nopaging=1
