The Takeaway
Value was the best-performing factor globally in the first quarter of 2026, while quality was the weakest. Yield also had a strong quarter, ranking second. Momentum and low volatility remained in the bottom half of the rankings, though both still outperformed the parent benchmark on a market-relative basis.
Factor performance rankings were not identical across regions and market segments. The US broadly mirrored the global pattern in large- and mid-cap stocks, but US small-cap momentum led by a wide margin. In developed markets ex-US, momentum and size were the weakest-performing single-factor indexes, while in emerging markets, low volatility was the weakest factor by a wide margin.
Factor leadership remained highly cyclical. Momentum led the global rankings in 2024, value led in 2025 and again in the first quarter of 2026, and quality moved from a strong position in 2023 and 2024 to the bottom half of the rankings in 2025 before becoming the weakest factor in the first quarter of 2026.
The quarter extended some of the leadership patterns that emerged in late 2025 while also reinforcing how quickly factor leadership can rotate. Exhibit 10 shows that value finished 2025 at the top of the global leaderboard, followed by momentum and yield, and value again led in the first quarter of 2026. By contrast, quality had already slipped into the bottom half in 2025 after stronger showings in 2023 and 2024, and its weak first-quarter 2026 result continued that loss of relative standing. This pattern is consistent with the broader message of the report: Factor returns are cyclical, and short-horizon leadership can change quickly.
The Morningstar Global Value Factor Index’s strong performance is driven primarily by stock selection within sectors rather than by broad sector positioning. The largest contributors included Verizon Communications, ConocoPhillips, Samsung Electronics, Merck, and an underweight position in Nvidia, while Microsoft, Qualcomm, Accenture, Bank of America, and JPMorgan Chase were among the largest detractors.
At the other end of the spectrum, the Morningstar Global Quality Factor Index was the weakest performing factor in the first quarter of 2026. Its largest upside contributors included Taiwan Semiconductor Manufacturing Company, ASML Holding, Comfort Systems USA, an underweight position in Apple, and an underweight position in Amazon.com. However, those gains were more than offset by detractors, including Microsoft, Alphabet Class A, Visa, Mastercard, and Nvidia.
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