February 2026 QiM Fact(or) Sheet
Summary
- AI narratives have pushed investors to rethink long-standing assumptions about profitability and competitive barriers.
- Previously “safe” companies face risks of margin pressure, disruption, and potential obsolescence.
- On traditional macro front,
- Policy noise picked up, with tariff-related legal back-and-forth adding uncertainty.
- US labour indicators strengthened, inflation remained sticky, and consumer cautious, while expansion moderated.
- Outside of the US, growth has been improving: although China continued spinning wheels, Japan, Germany, and UK - all showed signs of accelerating activity.
Despite the undercurrents, headline equity indices finished broadly flat:
- Energy, Materials and Utilities led, with little threat from AI, firmer commodity prices and lower bond yields supporting real-asset exposure and defensive cash-flow names.
- Technology, Consumer Discretionary and Communication Services lagged, as AI-capex and margin uncertainty drove multiple compression.
Among major countries:
- Korea, Taiwan, Japan and Canada outperformed: while Korea and Taiwan continued benefiting from tech hardware shortages (Samsung, SK Hynix, TSMC), Japan enjoyed strong earnings revisions and positive corporate reform sentiment, while Canada gained on heavy energy and materials exposure.
- China underperformed, despite a brief post-Lunar New Year bounce, performance was weighed down by persistent property stress, weak domestic demand and negative fund flows.
Value leadership remained sector-driven: Energy, Materials, Industrials vs de-rated long-duration AI spender stories, while AI jitters have shaken confidence in Quality, especially in software.
Factor families
Exhibit 1: Investable factor proxies versus respective capitalization weighted indexes
Outlook
Emphasizing Value family of factors based on:
- Wide valuation spread.
- Higher long-term interest rates (vs long-term average).
Exhibit 2: February 2026 Adaptive positioning
Source: SEI, the axis displays z-score exposure versus benchmark, as of February 27, 2026. Long term average exposure from January 31, 2003, to current. Benchmark: MSCI World Index.
Z-scores tell us how exposed a portfolio is to a factor, compared to a benchmark, based on what's normal for that factor. It is a common "currency" of portfolio exposures, making unrelated raw metrics like P/E or ROE comparable to each other.
A value of zero means the portfolio is neutral to the benchmark for that factor.
Higher values mean the portfolio has more exposure to that factor than the benchmark.
Economic indicators
U.S.: Labour strengthens; inflation sticky; consumer cautious; expansion moderates
Jobs: Hiring accelerates
- Nonfarm Payrolls: at 130K, well above expected and prior month.
- Unemployment Rate: 4.3%, below expectations and prior month.
- Initial Jobless Claims: monthly avg. 219k, in line with expectations and above previous month avg. 206K.
Inflation: slows CPI cools: PCE remains sticky
- Core CPI: 2.5% (YoY), in line with expectations and below prior month.
- Core PCE Deflator: 3.0% (YoY), above expectations and prior month.
- Hourly Earnings (preliminary): 3.7% (YoY),marginally above expectations and in line prior month.
Consumer: Spending stalls; confidence improved
- Retail Sales: 0.0% (MoM, SA), below expectations and prior month.
- Michigan Sentiment (preliminary): 57.3 above expectations and prior month.
- Consumer Confidence: 91.2, above expectations and prior month (pre-pandemic levels: 120-140).
Manufacturing and Services: Expansion moderates
- Markit PMI Manufacturing SA (preliminary): 51.2, below expectations and prior month.
- Markit PMI Services, SA (preliminary): 52.3, in line with expectations and prior month.
- Empire State Index, SA: 7.1, in line expectations and prior month.
The rest of the world
China: Activity steady; deflationary risks remain
- PMI manufacturing: 50.3, in line with expectations prior month.
- PMI services: 52.3, marginally above expectations and prior month.
- CPI: 0.2% (YoY), well below expectations and above prior month.
Japan: Inflation stable; activity accelerating
- CPI Core National: 2.0% (YoY) in line.
- Manufacturing PMI (preliminary): 52.8 marginally above expectations and prior month.
- Services PMI (flash): 53.8 in line with expectations and prior month.
Germany: Inflation cooling; activity rebounding
- CPI EU Harmonized (preliminary): 2.0% (YoY), marginally below expectations and prior month.
- Manufacturing PMI (preliminary): 50.7,above expectations and prior month.
- Services PMI (preliminary): 53.4, above expectations and prior month.
U.K.: Inflation moderating; expansion gains pace
- CPI EU Harmonized: 3.0% (YoY), in line with expectations and below prior month.
- Manufacturing PMI (preliminary): 52.0, marginally above expectations and prior month.
Sector and country returns
Exhibit 3: MSCI All Country World Index
Source: SEI, MSCI. As of February 27, 2026. Past performance is not a reliable indicator of future results.
Related insights
Glossary and index definitions
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