To say that today's market has forced large-cap growth investors to alter their expectations is, as you might expect, an understatement.

Truth is, growth investors are sounding a lot like value managers these days. They're on the lookout for undervalued stocks, taking a longer-term view on things and willing to wait for earnings momentum.

They're even sticking their heads into areas such as the financial and energy sectors, hoping to pluck out a hidden gem that will flourish in the post-recession economy. "You've got to be careful of what you consider to be growth," says Jerry Jordan, manager of the Jordan Opportunity Fund. "Growth in its most traditional sense, or what the Russell index would categorize as growth, may not be the best stocks to own."

The lines separating growth and value managers have in fact been getting blurrier and blurrier ever since the tech bubble burst in 2000. The current market crisis has stunted earnings and compressed P/E ratios to the point where large-cap growth and value fund managers are scouring much of the same landscape.

Jay Wong, co-portfolio manager of the Payden U.S. Growth Leaders Fund, points out that the Russell 1000 growth and value indexes, each with about 600 member companies, have a 200-company overlap. "Things have been changing dramatically over the past couple of years in terms of what's included in the indices," he says.

Fund managers say this is to be expected in today's market, where just about every industrial sector is "cheap" and P/E ratios of even some of the most growthy companies are below 20. "As you come through a period of poor economic growth and poor markets, you tend to find growth in defensive sectors," says Mark Bronzo, manager of the Security Global Investors Large-cap Growth Fund.

On the other hand, investors say, growth investing in today's environment offers higher risk premiums at a lower price-as long as you make prudent stock selections.

Growth strategies have outpaced value since the start of 2009, with the Russell 1000 Growth Index showing a year-to-date gain of 2.32% as of April 9, while the Russell 1000 Value Index suffered a 9.40% loss. On a broader level, results have been similar, with the Russell 3000 Growth index gaining 2.07% and the Russell 3000 Value Index losing 9.44%.

Last year, the Russell 1000 Growth Index finished with a loss of 38.44%, while value lost 36.85%. "I think it's better to be growth right now because I think everything is cheap, so you get a pass on valuation," says Alex Motola, manager of the Thornburg Core Growth Fund.

John Calamos, co-manager of the multi-cap Calamos Growth Fund, says he has been leaning toward large cap, particularly technology, since late 2006, when he was preparing for a recession. "We wanted to position the portfolio with stronger balance sheets and companies that could grow" in a tough economic environment, he says.

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