The Takeaway
Value style staged a strong comeback, outperforming growth across all regions. The most pronounced outperformance is seen in the US large-cap segment (11.9%) and the lowest in the US small-cap segment (2.8%).
Volatility was significantly higher for growth indexes in the US over its value counterpart, particularly within the large-cap segment. In contrast, the difference in volatility between value and growth was much less in the developed markets ex-US and emerging markets region.
Valuation spreads between growth and value stocks, measured by the P/E ratio (trailing 12 months), narrowed over the past quarter, with the exception of emerging markets region and US small-cap segment, where the spreads widened slightly. The most significant decrease was observed in the US large-cap segment where the spreads fell from 17.70 in Q4 2024 to 12.10 in Q1 2025.
Global equity markets delivered mixed results in Q1 2025. US markets initially surged but reversed course due to heightened volatility in mega-cap technology stocks, particularly those involved in AI and semiconductor manufacturing, following the launch of DeepSeek AI in China. Uncertainty around tariffs and concerns about slowing economic growth deepened losses, resulting in a -4.8% return for the quarter. Developed markets outside the US delivered robust gains of 6.4%, bolstered by strength in Europe, while emerging markets posted a more modest return of 2.2%, with strength in Chinese equities helping offset weakness in Indian and Taiwanese markets.
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