The FT Wilshire US Large 5-Factor Index has been designed to provide diversified exposure to multiple factor premia while mitigating unintended risk exposures.
But how has it performed during the latest round of market volatility?
Navigating Factor Performance in a Changing Market
Over the past decade, factor investing has faced structural headwinds, with factor performance shifting across different macroeconomic regimes. While value has provided strong recent returns, momentum has also played a key role in capturing trend-driven gains over the past five years. In contrast, size and low beta have faced headwinds, limiting their ability to drive returns in certain environments.
The FT Wilshire US Large 5-Factor Index is designed to navigate these changing conditions by maintaining balanced exposure across value, momentum, quality, size, and low beta factors. This balanced approach helps mitigate the risks of relying too heavily on any single factor, offering a more resilient and responsive strategy in different market environments.
Key Performance Highlights
Source: Wilshire Indexes. Data as of April 30, 2025.
YTD Performance – FT Wilshire US Large Cap vs US Large Multi Factor Index
Source: Wilshire Indexes. Data as of April 30, 2025.
Based on the latest data:
- 2025 YTD Return: The index has held up against market volatility, providing a more stable return profile compared to broad large-cap equities.
- Multi-Factor Positioning: Generally these indexes are designed to circumvent the challenges of relying on single-factor exposure. However, all factors have delivered relative gains in 2025, boosting the performance of multi-factor strategies.
- Lower Volatility, Improved Risk-Adjusted Returns: By maintaining exposure to multiple factors without excessive concentration in any single factor, the index has provided greater stability in uncertain conditions.
Why This Matters for Investors
With macroeconomic uncertainty remaining high, investors need strategies that adapt to shifting market environments. The FT Wilshire US Large 5-Factor Index provides a more resilient approach by ensuring no single factor dominates the portfolio.
This minimizes the impact of factor-specific downturns while capturing the benefits of long-term factor premia.
During market volatility, a multi-factor approach helps maintain balance across factors, to better navigate shifting market dynamics.
