Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivana Hampton.

Investing Insights is helping investors navigate market volatility in a new series.

Morningstar Strategists and authors will deliver timely

insights, trends, and tips. These episodes will pop into your podcast feed at least once a month.

This week's episode focuses on the types of U.S. stocks that are performing better and worse than the

broader market in 2025.

The investment factors that are leading might surprise you.

What can we learn when we look at this year's factor performance to help you in the long term?

Morningstar Indexed Strategist and columnist Dan Lefkowitz has research what's going on.

Welcome back to the podcast, Dan.

Thanks, everyone. Good to be here.

Well, let's lay the foundation for our conversation.

What is factor investing and how do you define factors?

Yeah. So factor investing is about taking bets on certain groupings of stocks with common characteristics. A lot of folks have heard of value investing or tilting towards companies of a smaller size.

Those are factors.

They have their origins in academic finance and their ways of explaining divergence within

the market, but also identifying sources of superior long-term returns.

So we've built a family of Morning Star Factor

indexes that are aligned with the Morning Star Risk Model, and we track six of the most

sort of commonly accepted factors. So value, size, yield, low volatility, quality, and momentum.

And we define those factors using fairly common ratios and metrics,

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