The Takeaway
Value staged a global comeback, with value stocks significantly outperforming growth counterparts and broad-market benchmarks across all considered regions.
Style drivers were consistent: growth indexes remain dominated by large technology names, particularly in the US and emerging markets, whereas industrials lead growth in the developed markets ex-US region and financial services consistently anchored value portfolios.
Concentration risk intensified in the large-cap growth segment: the Morningstar US Large Cap Broad Growth Index’s top-10 shares rose materially over five years, with the largest constituent (NVIDIA) representing roughly 19% of the index by Dec 2025, elevating single-stock tail risk even as headline volatility stayed moderate.
In the fourth quarter of 2025, equity markets in developed countries outside the US posted the strongest returns, with the Morningstar Developed Markets ex-US Target Market Exposure Index returning 5.5%. It was followed by the Morningstar Emerging Markets Target Market Exposure Index returning 4.6%, and the Morningstar US Market Extended Index returning 2.4%. The international rally was driven largely by performance in the UK, Canada, Switzerland, and Japan, while emerging markets saw highly concentrated gains in South Korea and Taiwan. The quarter was also characterized by a comeback in value stocks across all major regions. Returns of value indexes exceeded those of their growth counterparts by 5.2, 5.4, and 1.8 percentage points in the US, developed markets outside of the US, and emerging markets, respectively.
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