| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Q1 2026 marked a continuation of the shift away from Growth factor dominance as Value strategies outperformed across all regions, returning 6.7% globally while Growth underperformed in every market. Geopolitical shocks in Greenland and Iran, along with tensions around the Strait of Hormuz, unsettled markets and drove energy prices higher, reviving inflation concerns and reducing expectations for central bank rate cuts. High Dividend strategies also performed strongly, benefiting from Europe's substantial fiscal support through defense and infrastructure spending. Europe Value has now generated 83% returns over five years, nearly matching US Growth's 84% performance. The quarter saw market leadership broaden as the Magnificent Seven's grip continued to loosen, with Minimum Volatility moving up the leaderboard as investors sought cash flow and valuation support. Looking ahead, the uneven macroeconomic backdrop with diverging policy paths across regions is likely to reward selectivity, with Europe well-positioned for Value and High Dividend strategies while Quality may offer defensive positioning in the US.
Factor leadership shifted meaningfully in Q1 2026 as Value and High Dividend strategies dominated performance across regions while Growth underperformed broadly, driven by geopolitical tensions, rising energy prices, and Europe's fiscal expansion supporting reflation themes.
The rest of 2026 is likely to reward selectivity more than broad market exposure. The macroeconomic backdrop remains uneven, with policy paths diverging across regions and markets still sensitive to inflation, energy and growth surprises. Europe may be well positioned for Value and High Dividend strategies, while Quality may offer a more defensive approach in the US market.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 30 2026 | 2026 Q1 | - | defense, dividends, Europe, Factors, Geopolitical, growth, infrastructure, value | - | Value dominated Q1 2026 factor performance across all regions while Growth underperformed broadly as geopolitical tensions and rising energy prices shifted market dynamics. Europe's fiscal expansion through defense and infrastructure spending supports Value and High Dividend strategies, while the Magnificent Seven's influence continues to wane as market leadership broadens. |
| Jan 20 2026 | 2025 Q4 | DGRA, DGRG, EEI, EEIE, WTVE, WTVG, XUSA | AI, defense, emerging markets, Europe, Factors, growth, Quality, value | - | Value stocks dominated 2025 across all regions, with Europe and Emerging Markets leading the charge as investors rotated from concentrated AI trades to cash-generative names. European banks, defense, and industrials outperformed on policy support and compelling valuations. The trends are expected to continue into 2026 with rate easing and fiscal stimulus providing tailwinds. |
| Oct 8 2025 | 2025 Q3 | - | duration, Fed policy, fixed income, rates, TIPS, yield curve | - | WisdomTree's bond fund outperformed through strategic TIPS positioning and USD exposure, though duration underweight recently hurt returns. Fed rate cuts may paradoxically drive 10-Year yields to 4.60% based on historical curve relationships, creating attractive opportunities. Active bond management can now deliver substantial returns with lower volatility than the crash-insurance role bonds played in low-yield environments. |
| Jul 28 2025 | 2025 Q2 | - | AI, Dollar, Equity Factors, growth, momentum, Rate Cuts, small caps, value | - | Q2 2025 factor performance was dominated by tariff pause optimism driving Growth and Momentum leadership on AI strength, while Value claimed 2025's crown with +7.2% outperformance. Small caps finally revived in Europe and EM on rate cuts. Quality lagged significantly. The asynchronous policy environment favors a barbell of Quality Growth and Small Cap Value. |
| Jun 12 2025 | 2025 Q1 | AIR.PA, FCT.MI, HAG.DE, HO.PA, IVSO.ST, KIT.OL, KOG.OL, LDO.MI, RHM.DE, RNK.DE, RR.L, SAAB-B.ST, SAF.PA | defense, Europe, growth, Industrial, Military, NATO, Procurement | - | Europe's defense re-armament creates a structural growth opportunity with budgets potentially doubling to €800-950bn by 2030. Q1 earnings showed 19% revenue growth and record 38× monthly sales backlogs. Pure-play contractors like Rheinmetall have doubled while diversified suppliers provide stability. Industrial policy favoring European content and major program awards support the multi-year supercycle thesis. |
| Jan 20 2025 | 2024 Q4 | - | emerging markets, Europe, Factors, growth, momentum, Quality, Valuations, value | - | Growth factors dominated Q4 2024 and the full year, particularly in US markets, but elevated valuations at 38.8 P/E raise sustainability concerns. Value and Quality significantly underperformed across regions. For 2025, WisdomTree recommends diversifying factor exposure across Growth, Value, and Quality to capture anticipated micro rotations as Value appears attractively priced. |
| Nov 20 2024 | 2024 Q3 | AMZN, GOOGL, MSFT, NVDA, TSLA | dividends, Factors, growth, momentum, Quality, Rotation, small caps, value | - | Q3 factor rotation completely reversed first-half leadership as growth, momentum, and quality posted worst returns while small caps and high dividend led. Magnificent Seven underperformed dramatically, enabling equal-weight strategies to outperform by 9.2%. The broadening rally suggests healthier market dynamics, favoring diversification strategies over mega-cap concentration going forward. |
| Jul 25 2024 | 2024 Q2 | - | Equity Factors, growth, Magnificent Seven, momentum, Quality, Rate Cuts, small cap, value | - | Q2 factor performance remained concentrated in Magnificent Seven tech stocks, with Growth, Momentum, and Quality outperforming while Small Cap and Value lagged due to delayed rate cuts. Three catalysts could drive market broadening in H2: September Fed cuts, narrowing earnings gaps, and post-election clarity supporting broader participation beyond mega-cap dominance. |
| Apr 24 2024 | 2024 Q1 | AAPL, META, NVDA, TSLA | AI, Equity Markets, Factor Investing, growth, momentum, Performance, Quality | - | Momentum dominated Q1 2024 factor performance with double-digit outperformance globally, while Quality and Growth maintained strength. Small Caps reversed from Q4 leadership to worst performance due to delayed rate cuts. AI themes persisted with Nvidia up 82.5%, though market breadth improved. Despite robust economies and coming rate cuts, elevated valuations and election risks warrant balanced positioning. |
| Jan 18 2024 | 2023 Q4 | - | dividends, Equity Factors, growth, momentum, Quality, small caps, value, volatility | - | Q4 2023 saw Quality and Growth factors maintain dominance while Small Caps staged a late revival. Looking to 2024, potential mean reversion may favor dividend payers after non-dividend stocks' record outperformance over the past decade. High Quality dividend-growing companies could outperform tech stocks as market breadth expands, supported by expected rate cuts. |
| Oct 30 2023 | 2023 Q3 | - | dividends, Equity Factors, growth, Market Analysis, Performance, Quality, small caps, value | - | Q3 2023 marked a reversal for equity markets as Value and High Dividend factors outperformed in developed markets while Growth suffered. WisdomTree expects US market breadth to improve, favoring Value and Dividend stocks, while European manufacturing headwinds suggest defensive positioning. Factor investing showed renewed relevance after Growth's extended dominance. |
| Jul 24 2023 | 2023 Q2 | NVDA | AI, Factors, growth, Performance, technology, value | - | Q2 2023 continued the anti-2022 trend with AI-driven growth stocks dominating while value suffered. Nvidia gained 52% as tech mega caps drove a highly concentrated recovery. Markets are pricing perfection despite high uncertainty, creating potential opportunities in underperforming value and defensive segments that remain attractively valued. |
| Apr 26 2023 | 2023 Q1 | - | Banking, Factors, Fed, growth, Quality, rates, value | - | Growth led Q1 factor performance while Quality provided defensive resilience amid banking sector stress. Historical data supports Quality's outperformance during Fed pivot periods. With banking contagion risks, shrinking profits, and policy uncertainty ahead, positioning toward Quality factor appears prudent as markets shift focus from inflation to recession concerns. |
| Jan 18 2023 | 2022 Q4 | - | - | - | |
| Nov 2 2022 | 2022 Q3 | - | - | - | |
| Aug 11 2022 | 2022 Q2 | - | - | - | |
| Apr 12 2022 | 2022 Q1 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
ValueValue dominated factor performance in Q1 2026, outperforming across all regions with returns of 6.7% globally, 9.0% in the US, and 10.6% in Emerging Markets. Europe Value has generated 83% returns over five years, nearly matching US Growth's 84%. European Value benefits from fiscal expansion, defense spending, and infrastructure investment, positioning it well for continued outperformance. |
Value Europe Outperformance Fiscal Defense |
DividendsHigh Dividend strategies performed strongly across all regions, outperforming in all markets and even outperforming Value in Developed markets, the US, and Europe. Europe continues to benefit from a strong shareholder-return culture focused on dividends and share buybacks, supported by stronger cash flows and greater pricing power. |
Dividends Shareholder Cash Flow Europe Outperformance | |
GrowthGrowth underperformed every other factor in every region during Q1 2026 as market leadership broadened and the grip of the Magnificent Seven continued to loosen. This represents a significant shift from the previous dominance of US Growth stocks, particularly the technology giants that had driven markets for years. |
Growth Underperformance Technology Magnificent Seven | |
Defense SpendingEurope is increasingly supported by substantial fiscal support, particularly through defense and infrastructure spending. This fiscal expansion is driving a domestic reflation story that supports value and dividend segments through stronger cash flows and greater pricing power. |
Defense Fiscal Europe Infrastructure Spending | |
AIInvestors remained willing to pay for the structural growth story around artificial intelligence at the start of Q1 2026. However, as the quarter progressed and Growth factors underperformed broadly, the AI narrative appeared to lose some of its market-driving momentum compared to previous periods. |
AI Growth Technology Structural | |
| 2025 Q4 |
AfricaFund delivered exceptional performance with 67.21% returns in 2025, significantly outperforming the 44.7% benchmark. Portfolio companies show strong fundamentals with forward PE of 6.1x, dividend yield of 8.0%, and expected EPS growth of 19.2%. Manager emphasizes this represents genuine earnings growth rather than multiple expansion. |
Frontier Markets Emerging Markets Equities Value Growth |
LiquidityManager addresses investor concerns about African frontier market liquidity, explaining structural factors affecting trading volumes. Notes that foreign investor participation, local retail involvement, and institutional demand all impact liquidity. Observes improving trading volumes in Nigeria and Kenya from recent lows. |
Market Structure Trading Institutional Foreign Investment | |
Capital MarketsDiscussion of African capital market development including recent IPO activity in Nigeria and privatization efforts in Kenya. Manager notes proliferation of new investment fund products in Tanzania creating equity demand. Highlights structural tailwinds from growing pension savings pools given Africa's young demographics. |
IPOs Privatization Pension Funds Demographics | |
| 2025 Q3 |
RatesThe Fed is expected to cut rates significantly with the market pricing in 250 bps of cuts over 15 months. Historical yield curve spreads suggest if Fed funds reach low 3% range, the 10-Year yield could rise to 4.60%, offering attractive opportunities for bond investors into 2025. |
Fed Funds Yield Curve Rate Cuts Duration Bond Yields |
InflationStrategic positioning in short-duration TIPS helped boost performance earlier in the year. The analysis of real rates suggests current levels near 2.32% are approaching pre-QE averages of 2.55%, indicating rates may not need to fall as much as markets expect. |
TIPS Real Rates Core PCE Inflation Protection | |
| 2025 Q2 |
GrowthGrowth factors led Q2 performance globally and in the US, driven by AI-capex strength and blockbuster earnings from the Magnificent 7 tech companies. Growth remains very expensive across all regions with valuations increasing in Q2. |
AI Technology Earnings Valuations Momentum |
ValueValue emerged as 2025's global winner with +7.2% vs MSCI World, benefiting from cyclicals catching the dollar tailwind. Value showed pockets of strength in EM and Europe on better cyclicals, though it lagged in the US amid tech dominance. |
Cyclicals Dollar Financials Emerging markets Europe | |
Small CapsSmall and mid-caps finally outperformed large caps in Europe and EM after years in the wilderness. ECB's back-to-back cuts and softer dollar backdrop drove this Size revival, with cheaper valuations and rising earnings beta to domestic demand as key drivers. |
Rate cuts ECB Valuations Europe Emerging markets | |
MomentumMomentum was the most consistent factor in Q2, adding 3-5% across regions. Sustained earnings revisions kept Momentum atop regional tables even as Growth cooled in Q1, remaining potent in the US and Europe. |
Earnings Revisions Consistency Regional Performance | |
| 2025 Q1 |
Defense SpendingEurope's defense budgets are rising sharply with 2024 outlays jumping 17% to €326bn. NATO scenarios imply Europe could spend €800-950bn annually by 2030, more than double 2024 levels. Brussels mandates 65% of new procurement be sourced inside Europe, creating a generation-long demand curve for military contractors. |
Defense NATO Procurement Military Contractors |
Industrial PolicyThe European Defence Fund conditions grants on European content as Europe seeks greater autonomy in defense. Industrial policy supports tighter control of critical supply chains from missiles to tanks, creating long visible demand curves for European defense companies. |
European Autonomy Supply Chain Grants Content | |
| 2024 Q4 |
GrowthGrowth stocks maintained leadership in Q4 2024, particularly in the US market, posting the strongest returns across most regions. However, US Growth stocks became increasingly expensive with P/E ratios climbing to 38.8, raising sustainability concerns about this trend continuing into 2025. |
Growth Valuations Leadership Sustainability Expensive |
ValueValue stocks experienced significant underperformance in Q4 2024, particularly in the US market where they underperformed the most for the full year. European and Emerging Markets Value stocks are trading at attractive P/E ratios of 10 or lower, appearing inexpensive by historical standards. |
Value Underperformance Inexpensive Historical Attractive | |
QualityQuality factor continued to suffer across all developed markets in Q4, extending the Q3 trend and experiencing one of its worst performances in years. Quality had the worst returns in Europe and underperformed across all regions for the full year 2024. |
Quality Underperformance Worst Suffered Developed | |
MomentumMomentum was a standout performer in World, Europe, and Emerging Markets during 2024, driven by an exceptional first half performance. In Europe, Momentum dominated over Q4 alongside Value, showing regional variation in factor performance. |
Momentum Standout Exceptional Dominated Regional | |
| 2024 Q3 |
GrowthGrowth factor posted worst returns in Q3 after strong first half performance, representing a complete reversal. Growth stocks remain significantly elevated at 34.7 P/E ratio in US markets. The rotation away from growth highlights market broadening beyond previous concentration. |
Growth Valuations Rotation |
QualityQuality factor suffered negative performance in Q3 despite being among top performers in first half of 2024. This represents part of the broader factor rotation as markets shifted away from previous leadership themes toward more diversified performance. |
Quality Factor Rotation Performance | |
MomentumMomentum remains best-performing factor year-to-date in global equities despite Q3 weakness. In emerging markets, momentum also posted strongest performance for 2024. Momentum stocks saw valuations drop slightly in Q3 while other factors became more expensive. |
Momentum Emerging Markets Valuations | |
ValueValue stocks remain very cheap with 8.1 P/E ratio in US and 6.9 in emerging markets. Value and size remain weakest performing factors year-to-date despite some improvement. The factor continues to offer attractive valuations relative to growth. |
Value Valuations Emerging Markets | |
Small CapsSmall cap posted strongest returns in Q3 across developed markets, representing significant outperformance after weak year-to-date performance. Small caps suffered most significant valuation jump during the quarter as rotation favored smaller companies over mega caps. |
Small Caps Outperformance Valuations | |
DividendsHigh dividend factor posted strongest returns in Q3 across developed markets. In emerging markets, high dividend resisted but still posted negative returns year-to-date. The factor benefited from rotation toward income-generating strategies. |
Dividends Income Developed Markets | |
| 2024 Q2 |
GrowthGrowth factors continued to outperform in developed markets during Q2, particularly benefiting from exposure to the Magnificent Seven tech stocks. Growth was the most overweighted factor in these mega-cap names, driving its strong performance year-to-date. |
Growth Stocks Mega Caps Tech Outperformance |
MomentumMomentum factors performed strongly across regions in Q2, leading performance in emerging markets and ranking among top performers in developed markets. The factor benefits from 5.7% overweight exposure to Magnificent Seven stocks compared to benchmarks. |
Momentum Emerging Markets Factor Performance | |
QualityQuality factors delivered solid performance in Q2, ranking among top performers in developed markets and Europe. The factor maintains 2.4% overweight exposure to Magnificent Seven names, contributing to its year-to-date outperformance. |
Quality Developed Markets Factor Investing | |
Small CapsSmall cap factors suffered significant underperformance in Q2, particularly in the US market due to continued postponement of Federal Reserve rate cuts. The factor has no exposure to Magnificent Seven stocks, contributing to its relative weakness. |
Small Cap Rate Cuts Underperformance | |
ValueValue factors experienced mixed performance across regions in Q2. While suffering in the US from rate cut delays, value rebounded strongly in emerging markets. The factor maintains no exposure to Magnificent Seven stocks. |
Value Rate Sensitivity Regional Divergence | |
| 2024 Q1 |
AIArtificial Intelligence continued to drive market performance with focus on growth potential and corporate profitability impact. Nvidia gained 82.5% during the quarter as AI megatrends persisted, though market breadth began improving beyond just AI leaders. |
Artificial Intelligence Nvidia Technology Growth Megatrends |
MomentumMomentum was the strongest performing factor in Q1, delivering double-digit outperformance in the US and globally. This factor led performance across all regions as markets continued their bull run. |
Factor Investing Outperformance Bull Market Performance | |
QualityQuality factor continued to perform well in Q1 alongside Growth in developed markets, though it did not perform as strongly in Europe compared to other regions. |
Factor Investing Developed Markets Performance Fundamentals | |
GrowthGrowth factor maintained strong performance in developed markets and led the way in emerging markets, with technology stocks and new economy companies benefiting from better-than-expected economic data. |
Factor Investing Technology Emerging Markets Economic Data | |
Small CapsSmall Cap performance reversed dramatically from being the best factor in Q4 to the worst in Q1. They suffered from postponement of rate cuts and posted the deepest underperformance during the quarter. |
Factor Investing Interest Rates Underperformance Market Cap | |
| 2023 Q4 |
QualityQuality continued to dominate in Q4 2023 and throughout the year, posting strong returns in developed markets. However, there's a notable divergence between high Quality companies that pay dividends versus those that don't, with Quality dividend payers potentially poised to outperform in 2024. |
Quality Dividends Tech Outperformance Valuation |
GrowthGrowth remained the clear winner in developed and US equities with double-digit outperformance versus the market in 2023. Growth saw the biggest increase in Price to Earnings ratios across regions during Q4 following the sharp rally. |
Growth Outperformance Valuation Rally Tech | |
Small CapsSmall Cap stocks awakened after three quarters of lacklustre performance, posting the strongest outperformance in the US and Europe during Q4. This late revival helped drive the broader market rally as breadth increased. |
Small Caps Revival Outperformance Breadth Rally | |
DividendsResearch suggests potential mean reversion favoring dividend payers in 2024, as non-dividend payers have outperformed dividend payers by the largest amount on record over the last 20 years. High Quality dividend growing stocks may outperform high Quality tech stocks going forward. |
Dividends Mean Reversion Outperformance Quality Tech | |
| 2023 Q3 |
ValueValue factors posted the strongest returns in developed markets and European markets during Q3 2023, after two difficult quarters. The analysis suggests Value stocks may benefit from expected market breadth improvement going forward. |
Value Outperformance Developed Markets |
QualityQuality performed strongest in US markets during Q3 2023, posting the best returns followed by minimum volatility. Quality has been a standout winner in developed and US markets for the full year 2023. |
Quality US Markets Outperformance | |
GrowthGrowth factors suffered across developed, European and US markets in Q3 2023, posting underperformance. Growth was the standout loser in emerging markets and underperformed in European markets for the full year. |
Growth Underperformance Tech | |
DividendsHigh Dividend factors posted strong returns in developed markets and European markets during Q3 2023. The analysis expects market breadth improvement to favor Dividend stocks going forward. |
Dividends High Dividend Outperformance | |
Small CapsSize factors suffered in developed, European and US markets during Q3 2023. However, in emerging markets, Small Cap posted the strongest returns for the full year 2023, followed by Value. |
Small Caps Size Emerging Markets | |
| 2023 Q2 |
AIBig tech stocks benefited from positive sentiment around generative artificial intelligence and AI in general, with companies like Nvidia posting exceptional returns of 52.3% in Q2 after already gaining 90% in Q1. AI enthusiasm drove much of the tech mega cap performance that dominated equity markets. |
Artificial Intelligence Generative AI Tech Nvidia Performance |
GrowthGrowth stocks continued their strong performance from Q1, outperforming by 3.6% globally and 5.2% in the US during Q2. This represents a sharp reversal from 2022 when growth stocks suffered. Growth factor outperformed in 5 out of 6 months in the first half of 2023. |
Growth Stocks Factor Performance Outperformance Reversal Tech | |
ValueValue stocks suffered significant underperformance in Q2, continuing the reversal from their strong 2022 performance. However, Value remains very cheap with P/E ratios of 7.2 in the US and 9.4 for developed markets, potentially creating opportunities among the laggards. |
Value Stocks Underperformance Cheap Valuations Opportunities Laggards | |
| 2023 Q1 |
QualityQuality was the second-best performing factor in Q1 2023, benefiting from its resilience during periods of high volatility and uncertainty. Historical analysis shows Quality companies outperformed in 6 out of 7 periods following Fed rate hike cycles, with average outperformance of 3.57%. Given rising concerns about banking industry contagion and central bank policies, positioning toward Quality factor could be prudent. |
Quality Resilience Outperformance Defensive Banking |
GrowthGrowth stocks performed best in Q1 2023 across all geographies, rebounding strongly from a challenging 2022. Growth companies tend to benefit from easier monetary conditions, leading to outperformance in 5 out of 7 periods following Fed rate peaks with average outperformance of 3.08%. The factor benefited from anticipation of central bank pivots and easing monetary conditions. |
Growth Rebound Monetary Outperformance Pivot | |
ValueValue factor suffered in developed markets during Q1 but continued to deliver outperformance in emerging markets. In the US, Value got even cheaper with current P/E of only 7.2. Value companies' performance was mixed historically, outperforming in 4 out of 7 periods following Fed rate peaks but posting double-digit underperformance in others. |
Value Valuation Emerging Underperformance Cheap | |
RatesCentral banks in US, Europe and UK continued hawkish policies, but evolving banking crisis could alter monetary policies ahead. Chair Powell acknowledged tightening financial conditions could have same impact as another quarter-point rate hike. Markets are pricing in rate pauses and cuts for later in 2023, with uncertainty very high as inflation worries war with recession fears. |
Rates Fed Hawkish Banking Pivot |
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