The Takeaway
In the first quarter of 2026, the returns for most regional benchmarks and their value/growth components were negative. The Morningstar US Market Extended Index returned negative 4.05%. The Developed Markets ex-US and Emerging Markets Target Market Exposure Indexes returned negative 0.68% and negative 0.49%, respectively.
Value stocks continued to outperform growth stocks and broad-market benchmarks across all regions and size segments analyzed. Value index returns beat their growth counterparts by 6.79 percentage points in the US, 8.15 percentage points in developed markets outside the US, and 3.42 percentage points in emerging markets.
The technology sector continued to dominate growth indexes in both the US and emerging markets. Conversely, the industrials sector led the growth segment in developed markets outside the US. Across the globe, the financial-services sector remained the consistent anchor for value portfolios.
The Morningstar Quarterly Style Monitor for the first quarter of 2026 analyzes global equity market performance, focusing on the dynamics between value and growth investing. Against a backdrop of a supply-side energy shock, a US technology sector selloff, and economic weakness in China, global equity markets broadly delivered negative returns. The central theme of the report is the continued and extending leadership of value stocks over their growth counterparts. Across the US, developed markets outside the US as well as emerging markets, value indexes benefited from their exposure to the energy sector with it being one of the largest contributors to value's active return versus the growth index. Furthermore, historically wide valuation spreads in the US suggest that growth stocks may face lower expected returns over the next five years compared to value.
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