The Takeaway
Momentum was the best-performing factor globally in the second quarter of 2026, while low volatility was the weakest. Size and quality also outperformed the parent benchmark, while value and yield lagged despite posting positive absolute returns.
Momentum was the dominant factor in the second quarter, leading performance across regions and market segments. Its leadership was supported by strong contributions from technology and semiconductor-related stocks. The remaining factor rankings varied: Size ranked second globally and in the US, while quality took the second spot in developed markets ex-US and emerging markets. Low volatility was the weakest performing factor by a wide margin in most regions, except in developed markets ex-US, where yield ranked last.
Factors are complementary and offer strong diversification benefits when combined in a portfolio.
The quarter reinforced how quickly factor leadership can rotate. Exhibit 10 shows that value finished 2025 at the top of the global leaderboard and remained in lead in Q1 2026, but momentum reclaimed the top spot in Q2 2026 and now leads year to date. Quality, which had slipped into the bottom half of the rankings in 2025 and was the single weakest factor in Q1 2026, rebounded to outperform the benchmark this quarter, while 2025's leaders—value and yield—gave back relative performance and finished below the parent index. This pattern highlights the cyclical nature of factor returns, and how short-horizon leadership can change quickly.
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