The Role of Value and Growth Stocks in Portfolio Returns: Insights From the Nigerian Stock Market

Abstract

The purpose of this study is to evaluate the impact of value and growth stock investment strategies on aggregate market index returns in Nigeria. This goal was addressed by focusing on three key dimensions: the performance of value stock investment strategies, the performance of growth stock investment strategies, and the comparative performance of value and growth stocks. The study design was ex-post facto and employed a multivariate analysis using a multiple regression model to analyse the panel data that was subjected to pooled and panel effects estimations. The findings reveal that value stock performance has a positive but not statistically significant impact on market index returns, while growth stock performance has a negative and not statistically significant effect. Additionally, there was a significant difference in the performance of value and growth stocks. These results suggest that investors should consider diversifying their investment strategies and not rely solely on value or growth stocks classifications. The study contributes to the existing literature by providing insights into the impact of these investment strategies on portfolio returns. Understanding the distinct performance characteristics of these two types of stocks can help investors make more informed decisions and potentially achieve better returns on their investments.