Investment Factor

An investment factor is a characteristic that drives investment risk and return. The Morningstar Factor Profile identifies seven factors: style, yield, momentum, quality, volatility, liquidity, and size.

Created in 1992, the Morningstar Style Box was the first attempt at measuring stock factors: size (small, mid, and large capitalization) and style (value, blend, growth). Since then, more investment factors have emerged as meaningful indicators of stock performance.

In 2019, Morningstar created the Factor Profile, which analyzes a fund’s underlying holding through seven different investment factors. It looks back on three time periods: the trailing one-, three-, and five-year periods. The Factor Profile compares fund factor data to its Morningstar Category average and Morningstar Category index.