After remaining torpid for most of the year, equity market volatility is once again rising. This change in the investment climate can be attributed to a number of factors: a pending Federal Reserve (Fed) rate hike, lower expectations for economic growth and less benign credit market conditions.

After bottoming last week near multi-year lows, the VIX Index—which measures implied volatility on S&P 500 stock options—spiked to more than 16 on Wednesday, an increase of roughly 50 percent and closer to the VIX’s long-term average of 20, according to Bloomberg data. Based on my expectations for growth and credit markets, I believe volatility will continue to normalize.

Beyond more sleepless nights, this shift in the volatility regime has implications for portfolio positioning. In particular, a regime of rising volatility suggests investors may want to adjust their exposure to different equity factors. One such factor is “momentum“, the concept that rising stock prices will continue to rise—a momentum trading approach involves buying whatever goes up the most.

Over the long term, exposure to momentum stocks has typically been additive to a portfolio’s returns. Stocks that exhibit momentum characteristics have tended to outperform, while momentum may also be a complement to a value-investing approach. However, while the momentum approach has normally been additive in the long run, historically there have been environments in which momentum has been less effective, at least relative to other equity factors.

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Since their inception in recent years, the MSCI USA Momentum Index has produced higher monthly returns, on average, than the MSCI Quality Factor Index (source: Bloomberg).

During periods of flat or declining volatility, momentum has done particularly well versus the quality factor, defined as a focus on companies with strong balance sheets, including high return on equity and low financial leverage.

However, during periods when the VIX Index is rising sharply, the relationship reverses and quality tends to perform better