Education . Asset Growth . 2 of 3 RupeeCase
More growth. Less return.
Sort every stock by how fast it grew its assets in a year. Then check how each group did the next year. The line runs backwards, the slowest growers sitting on top.
Asset growth group Return next year
Slowest 10 pct . disciplinedplus 9.1
Fastest 10 pct . aggressiveminus 10.4
The gap19.5
That gap has a name. In 2015 Eugene Fama and Kenneth French built it into their model as conservative minus aggressive, low growth minus high growth. On a plain value weighted basis the slowest growers beat the fastest by about 13 a year across 1968 to 2003. Compound a 13 point yearly gap for ten years and the two ends finish about 3.4 times apart on the same money. It shows up in developed and emerging markets, and it held up when researchers re-tested the whole zoo of published factors.