Henrik Cronqvist and Frank Yu of China Europe International Business School and Stephan Siegel of the University of Washington say that the choice between value and growth "has a biological basis". They studied the shareholdings of over 30,000 pairs of twins in Sweden, and found that the average price-earnings ratios on the portfolios of identical twins were more similar than those of non-identical ones. This, they say, suggests that preferences between value and growth stocks have a genetic basis, because the same genes lead to more similar choices than do different genes.
This is not a unique finding. Research led by Bjorn Wallace of Stockholm School of Economics has found that identical twins make more similar choices of pension investments than do non-identical twins.
Although this suggests that investment choices have a genetic basis, it does not prove it. It could be that identical twins have similar portfolios not just because they have the same genes but because they tend to be closer than ordinary siblings and talk to each other more. It might, therefore, be that the similarity of their investments is evidence not of a role for genes but rather of the power of peer effects.
However, Mr Cronqvist has found other influences upon portfolio choices. Men, he says, are more likely to be growth investors than women: their portfolios have higher average PE ratios. Married people, richer ones and younger folk are also more growth-oriented. But investors whose parents were poor tend to be more value-oriented.
Our lifetime experiences also affect our choice between value and growth. Mr Cronqvist has found that people who enter the labour market in recessions are more likely to be value investors even years later. So too are people who grew up during the Great Depression of the 1930s.
There's a common theme behind these findings. We think of value stocks as being safer than growth ones because the dividend offers us a reasonably secure income. People who want more security - whether because of their genes, lifetime experience or personal situation - are thus more likely to be value investors. This is consistent with separate research by Ulrike Malmendier and Stefan Nagel, two California-based economists. They've found that people who experienced hard times in their formative years are more risk-averse even decades later.
Mr Cronqvist points out that Ben Graham, who is generally regarded as the father of value investing, fits this pattern. His father died when he was young and he grew up in poverty. Such a background might have disposed him to like the security of a good dividend.
All this might be good news for value investors. People who experienced the recessions and mass unemployment of the early 1980s in their impressionable years are now in their 40s and 50s and entering their prime investing years - or are in influential positions in fund management - while those who grew up in the better times of the 1950s and 1960s are retired and winding down their portfolios. This generational shift might favour value stocks over growth for a while.
Such an inference is, however, rather bold; the danger is that the fund management industry will soon be dominated by men who are now in their 30s and were shaped by the good times of the later 1990s and 2000s.
There is, however, a more modest but nevertheless important implication of all this. Quite simply, our investment choices are influenced by some forces which are not obvious. An awareness of these might help us improve our decision-making.
