With traders taking both sidesof the bet using BlackRock Inc. ETFs, the question is who will turnout to be right? (Photo: Shutterstock)

(Bloomberg) –In the battle of investing styles, growth and value are onopposite ends of the ideological spectrum. But with traders takingboth sides of the bet using BlackRock Inc. ETFs, the question is who willturn out to be right?

Two of the largest exchange-traded funds tracking the classicfactors have taken in record cash in November. The iShares Russell1000 Growth ETF, ticker IWF, took in $353 million last week, itssecond largest weekly inflow this year in just 3 1/2 tradingsessions, putting it on track for its second best month of 2018.Meanwhile, its value counterpart, the iShares Russell 1000 ValueETF, ticker IWD, is also on track for its biggest month of inflowsthis year, having taken in nearly $1 billion in November.

“There's a tug-of-war between growth and value investing beingplayed out with IWF and IWD,” said Todd Rosenbluth, director of ETFresearch at CFRA Research. “Value gained ground in the thirdquarter, and in October, as the more defensive style with aportfolio of lower priced stocks became in vogue. However, asinvestors have positioned for the typically strong holiday rally,some of them have also been willing to take on risk and havereturned to growth.”

Historically, the fourth quarter is good for stocks, but not sothis year. The S&P 500 Index is down almost 9 percent, puttingit on track for the worst quarter since 2011.

That has investors questioning whether the recent slide is partof a healthy rotation and correction — or something more. Defensiveindustries have outperformed in the stock market, and the weaknessin equities has spread to credit and oil, developments that havepreceded slower growth in the past.

“The central question is: Are the equity markets and oil marketssuggesting a significant slowdown in U.S. and global growth nextyear or is it more internally driven?” Jay Pelosky, chiefinvestment officer and co-founder of TPW Investment Management,said on Bloomberg TV.

Pelosky falls into the latter camp, believing the recentturbulence is more about internal dynamics than a significantpending slowdown. Such a stance might favor growth, although valuehas been the clear winner since the end of September. And twolooming catalysts could influence which way the coin falls: Fedspeak this week from Chairman Jerome Powell and Vice ChairmanRichard Clarida, and a meeting between U.S. President Donald Trumpand Chinese leader Xi Jinping at the Group of 20 summit inArgentina.

The Russell 1000 Growth Index has fallen more than 12 percent inthe fourth quarter, over twice the decline in the Russell 1000Value Index. Flows have followed that performance, with value ETFstaking in more than three times the cash of growth ETFs inNovember.

“I'd judge this as the messiness of a transition from growth tovalue, where it doesn't happen overnight,” said BloombergIntelligence analyst Eric Balchunas. “Clearly there's been a shiftto value. It just takes a slower, longer time to play out.”

Still, investors should remember that value and growth aren'tthe only factors that can be played through ETFs, according toHolly Framsted, head of iShares U.S. smart beta at BlackRock.Indeed, quality companies with more profitability, less leverageand stable earnings could provide a better buffer in a maturingcycle, she said.

“Investors should keep in mind that both growth and value stylesof investing in the purest sense are risk-on approaches,” Framstedsaid. “Investors may not find the protection they seek with thisbinary lens.”

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