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In a dizzying year of economic news, along with numerous twists and turns in financial markets, the performance leadership for the momentum factor stands out as a hardy perennial year to date. This equity risk factor continues to outperform the rest of the field, as well as the broad US stock market, based on a set of ETFs for year-to-date trading through yesterday’s close (July 9).
The iShares MSCI USA Momentum Factor ETF (NYSE:MTUM) is up 15.5% so far in 2025. That’s more than twice the return for the stock market writ large this year via the SPDR S&P 500 ETF (SPY).
During the April tariff tantrum, MTUM took a heavy blow in line with the market overall. The difference is that in the ensuing rebound, MTUM rallied faster and further than the rest of the field and is now enjoying the performance fruits of that recovery for 2025 comparisons.
Out of the ashes of the April selloff another factor fund has rebounded sharply and is now nipping at MTUM’s heels for the year-to-date crown. The Invesco S&P 500 High Beta ETF (NYSE:SPHB) is now the second-best factor performer in 2025 with a 13.9% advance. Previously, SPHB had been tracking or trailing the broad market (SPY), but in recent weeks the High Beta ETF’s rebound has accelerated. Over the past month, SPHB has outperformed MTUM by a wide margin, rallying 9.2% vs. 3.0% for MTUM. This could be an early sign of leadership rotation that will prevail in the second half of the year.
Invesco defines its “high beta” strategy as tracking the S&P 500 High Beta Index, which holds “the highest sensitivity to market movements, or beta, over the past 12 months. Beta is a measure of relative risk and is the rate of change of a security’s price. The Fund and the Index are rebalanced and reconstituted quarterly in February, May, August and November.”
If recent history is a guide, SPHB may be the new rising star in the evolving horse race for 2025 factor performance.