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Home / White Papers 2025

Lessons from the Quant Winter

RQI Investors
25 September 2025

Summary

The quant winter was a two-year period from 2018 to 2020 when quant funds underperformed. This was largely a Developed Markets effect, with Australia also affected, and Emerging Markets showed a different profile (shorter and sharper).

The main culprit was Value, which performed poorly (and progressively worse) as the period went on. Other factors like Growth and Momentum – which usually compensate for Value underperformance – and Low Volatility did not. Quality performed relatively well.

The “why” is not clear. Low inflation and the growth of big tech from about 2015 are certainly contributors, but the lack of performance of Growth and Momentum is still a puzzle.

By using a perfect forecast or “oracle” approach, we see that it would have been difficult to position a quant factor model any differently.

The last few years have shown strong quant factor performance and have raised questions of whether a quant winter could recur. We believe this period is more of a recovery from the winter than a precursor to another factor drought.

Download the full paper

First Sentier Group

25 September 2025

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