For the first in a three-part article series, Morningstar used its database to “dig into the current spell of underperformance for value funds” by analyzing the historical landscape, putting recent returns into a long-term context and examining allocation data.

The article reports, “The September stock market swings saw value strategies stage their strongest monthly performance in years, but that wasn’t enough to affect the long-term trends.” The past three years, it explains, have been particularly tough for value, with 2016 representing the only period where value came out ahead of growth. The following heatmap illustrates—a negative (red) block shows a time period in which value underperformed:

When five-year returns are analyzed, the results are even more dramatic:

Over longer periods, the article reports that “return disparities often get smoothed out, but this hasn’t proven to be the case for value: “The good years for the investment approach have rolled off as the 10-year anniversary of the financial crisis has passed, and the gap has grown to historically wide levels.”

The analysis also identified sectors where value portfolios were overweight or underweight compared to growth funds:

“Large growth, true to its reputation, clocked in with a significant weighting in technology stocks of almost 27%,” it explained, adding, “Consumer cyclicals ranked second at an average of roughly 18%.” Large value funds, on average, “counted financials as their largest weighting at 20%. The weighting toward energy stocks, while only the fifth highest, would prove to be a significant albatross when it came to returns.”