Value Regains Its Footing As Factor Rotations Intensify

According to the Index Dashboard: S&P 500® Factor Indices – August 2025 report, August was another strong month for U.S. equities, but beneath the surface the rotation across factors revealed a more nuanced story

Market Performance
The S&P 500 rose 2.0% in August, extending its winning streak to four consecutive months and notching its 20th all-time high of 2025. Market breadth improved markedly: 54% of S&P 500 constituents outperformed the index, while only four of the “Magnificent 7” managed gains during the month. This shift away from mega-cap dominance provided fertile ground for factor strategies, particularly those tilted toward value .

Pure Value Stands Out
The S&P 500 Pure Value Index led all factors in August, outpacing the benchmark by 4.3% and lifting its year-to-date relative performance closer to parity (–0.6%). Importantly, 87 of its 107 constituents (77.6%) outperformed the S&P 500, underscoring that August’s rally was broad-based. Given the headwinds value has faced in a growth-driven cycle, this resurgence highlights how quickly sentiment can turn when market leadership rotates .

Momentum Still Leads Year-to-Date
Despite lagging the S&P 500 by 1.4% in August, the Momentum factor remains the strongest performer in 2025, with a 12.4% year-to-date excess return. Over its 10-year live history, Momentum has consistently excelled in rising markets, delivering average outperformance of 3.9% in positive one-year periods and even cushioning losses in down markets. Remarkably, Momentum has produced positive returns in 75% of the years when the S&P 500 itself was negative .

High Beta Keeps Its Streak Alive
The High Beta Index notched its fifth consecutive month of relative outperformance, albeit modestly. It remains one of the few factors with a sustained streak in 2025. High Beta’s sensitivity to broader sentiment shifts makes this consistency notable, especially given the more volatile path of rates and macroeconomic data in recent months .

Longer-Term Context
Looking at 15-year histories, Momentum and Quality have delivered some of the most attractive combinations of return and volatility, while Value has remained cyclical—often rewarding patient investors during broadening market phases like August 2025. Meanwhile, defensive factors such as Low Volatility and Dividend Aristocrats lagged in August, reflecting investors’ renewed appetite for risk .

Conclusion
August underscored that factor leadership is not static. Value made a strong case for reasserting itself as market breadth improved, while Momentum continued to prove its resilience across cycles. For investors, the lesson is clear: diversifying across factors—rather than betting on a single style—remains the most prudent way to navigate rotations in leadership.

You can find the report here:

Index Dashboard: S&P 500® Factor Indices – August 2025 report