Disparity Among Value Stocks

Chart of the Week for February 25-March 2, 2000

An interesting anomaly can be seen among value stocks. It seems that in 1999, investors who chose low yielding large-cap value stocks received a greater total return on their investment than investors who chose high-yielding large-cap value stocks. The first step in our analysis was to divide the stocks in the S&P 500 Index between growth and value segments. We did this by selecting all stocks with a forward price-to-earnings or price-to-book ratio which was less than the Index average as of December 31, 1999 (growth stocks generally have high P/E and P/B ratios, and value stocks generally have low ratios).

Next, we separated these value oriented universes according to dividend yield. The striped bars show the average annual returns for stocks in the S&P 500 Index with yields lower than the average yield of the Index itself (which in 1999 was 1.1%). The solid bars show the average annual returns for stocks with yields that were higher than the average yield of the Index itself.

What we can conclude from this is that the market appeared to reward companies who did not offer a significant level of income. Perhaps this is because investors are preferring to see companies reinvest their earnings.

This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.

Investment information can change rapidly and the changes can be significant particularly in volatile markets. For this reason “as of”’ dates are provided for specific data where applicable. The information should not be considered current after the dates provided.

Please read both the current applicable prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights, investment objectives, risks and performance information. Investing in mutual funds and other investment vehicles involves risk, including possible loss of the amount invested. Investors should carefully consider the Fund's investment objectives, risks, charges and expenses before investing or sending money. The prospectus contains this and other information about the investment company. All Vantagepoint Funds invested through 401 or 457 plans are held through VantageTrust. The Vantagepoint Funds are distributed by ICMA-RC Services LLC, a wholly owned broker-dealer subsidiary of ICMA-RC and member FINRA/SIPC. For a current prospectus, contact ICMA-RC Services, LLC.

The performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240. Para asistencia en Español llame al 800-669-8216. Performance data current to the most recent quarter end is available by visiting www.icmarc.org.