Equity factors can be difficult for investors to predict, according to insights gleaned from the recently published Morningstar Factor Monitor. According to the report—which examines performance across a range of global equity factor indexes for the first quarter and historically—quality and momentum were among the worst-performing factors in the first quarter after outpacing nearly all factors in 2024.
Global Markets Through a Factor Lens: Morningstar Indexes
The underperformance of quality during a tumultuous first quarter may come as a surprise to most investors, but the report’s author, Alex Bryan, encourages investors to view factor performance with a healthy dose of market context and perspective.
Alex Bryan, CFA – Director of US Equity Products, Morningstar Indexes
“Factor performance in the first quarter looked vastly different from performance in 2024. Quality and momentum were among the worst-performing factors in the first quarter of 2025, but among the best-performing in 2024. In contrast, the more defensive low-volatility and yield factors led the pack during this tumultuous quarter. The underperformance of quality might come as a surprise, as investors might expect quality stocks to be more resilient to market turbulence than most. However, historically, the Morningstar quality factor indexes exhibited a similar level of risk to their parent benchmarks. Momentum’s underperformance may come as less of a surprise, as it has historically struggled in periods of high market volatility.”
The report also points out some bright spots during the first quarter, including the outperformance of the more defensive low-volatility and yield factors globally and in the US.
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