US SMALL/MIDCAPS-Investors gravitate to growth stocks

NEW YORK, Sept 19 (Reuters) - Small-cap growth stocks outperformed value stocks on Monday, with investors gravitating towards proven earnings potential in a sign that risk aversion over the economic outlook was still running high.

This year stocks with a track record of producing earnings and revenue growth, which typically command a higher market premium, have performed much better than stocks considered to be undervalued in comparison with the market.

The Rydex S&P SmallCap 600 Pure Value exchange traded fund (RZV.P), which tracks small-cap value stocks, fell 2.6 percent, while the Rydex S&P SmallCap 600 Pure Growth fund (RZG.P) fell just 1.1 percent.

Since the start of the year, the former is down 15.9 percent while the latter has dropped just 3.1 percent. Value stocks started to underperform growth stocks dramatically in August and their relative performance hit multi-year lows on Monday.

"We probably are leaning more to growth at the moment than value," said Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas, Texas. "You can depend on those earnings a little bit better."

Across the wider market stocks fell but staged a late comeback after fears of a looming Greek debt default diminished on news of a possible deal to advance new bailout funds.

The S&P MidCap 400 index .MID fell 1.4 percent and the S&P SmallCap 600 index .SML dropped 1.6 percent. In comparison, the benchmark S&P 500 .SPX lost 1 percent.

Bradshaw said he was still "finding buys" in the small and midcap market despite the high levels of uncertainty. "It's being very specific and stock selective," he said.

In company news, shares in Lennar Corp (LEN.N) rose 4.8 percent to $14.47 after the homebuilder forecast a strong fourth quarter, suggesting the U.S. housing market may finally be showing signs of coming out of a long slump. [ID:nL3E7KJ1GH]

Pharmaceutical Product Development Inc PPDI.O fell 4.1 percent to $27.37. The company said it has appointed Raymond Hill as its chief executive, effective Sept. 16, four months after David Grange retired as CEO. [ID:nL3E7KJ27Q]

Also in management news, Wright Medical Group Inc (WMGI.O) gained 8.6 percent to $17.40. The orthopedic device maker named Robert Palmisano as its new chief executive, succeeding Gary Henley who resigned in April. [ID:nL3E7KJ24D]

(Editing by Kenneth Barry)