Why Value, Quality, and Momentum Belong Together

Research Affiliates

Noah Beck, Que Nguyen

Research

12 Pages

Research Affiliates shows how combining value, quality, and momentum can improve the investment process by not only helping expected returns but also the experience of earning them. Smoother performance, shallower drawdowns, and greater adaptability increase the likelihood that investors can maintain discipline through full market cycles.

Key Takeaways

Factor Combination: Value, quality, and momentum are economically distinct and imperfectly correlated. This diversification of alpha sources can improve robustness across regimes.
Integration: The integration of value, quality, and momentum reflects three simple but powerful insights: markets are complex, investors are human, and better outcomes require more than one lens.
Investor Benefit: Smoother performance, shallower drawdowns, and greater adaptability increase the likelihood that investors can maintain discipline through full market cycles.
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