Value Trumps Growth in Q3

November 9, 2009 (PLANSPONSOR.com) – A Mercer study found value funds outperformed growth funds in the third quarter, as the median large cap value fund posted a gain of 16.3% compared to a gain of 13.8% for the median large cap growth fund.

Mercer’s third-quarter 2009 Defined Contribution Universe Summary indicated that the small cap segment of the market trended in the same direction as large cap stocks, as the median small cap value fund outperformed the median small cap growth fund by 430 basis points.

The median large cap fund underperformed the S&P 500 Index by 60 basis points for the third quarter, Mercer indicated. Small cap funds outperformed their large cap counterparts for the quarter, as the median small cap fund gained 18.2% for the quarter versus a gain of 15% for the median large cap fund.

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Within the international equity asset class, the median manager underperformed the MSCI EAFE Index by 80 basis points during the quarter. The median emerging markets manager gained 21.5% for the quarter and slightly outperformed the MSCI Emerging Markets Free Index by 50 basis points.

The median core fixed income fund outperformed the Barclays Capital Aggregate index for the third quarter by 140 basis points.

Meanwhile, Mercer said there were gains in all equity markets during the period.

The S&P 500 Index gained 15.6% during the quarter while the Barclays Capital Aggregate Bond Index posted a gain of 3.7%. Money market instruments had a zero return, as measured by the three-month T-bill rate.

The balanced asset class, using a benchmark of 60% S&P 500/40% Barclays Capital Aggregate Bond Indices, posted a gain of 10.8%. International equity markets, as measured by the MSCI EAFE Index, gained 19.5% during the third quarter.

Mercer said the international equity asset class outperformed U.S. equities for the quarter by 390 basis points. Global equities gained 17.4% for the quarter and underperformed international equities by 210 basis points.

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