US Equity Factors: Momentum’s 2024 Strength
- the US stock market's recent recovery has propelled momentum strategies to the forefront of equity factor performance this year.
- factor performance in 2025 is mixed, with roughly half of the strategies still experiencing losses.
- The struggles of small-cap stocks persist, tho some analysts foresee potential opportunities.John Higgins,chief markets economist at Capital Economics,suggested that easing concerns about the US economy could provide some...
Momentum strategies are the top performers in the US stock market in 2025, as the iShares MSCI USA Momentum Factor ETF (MTUM) leaps ahead with a 13.5% year-to-date gain. While the broader market, tracked by SPY, sees more moderate growth, the story isn’t uniform. Small-cap equities, specifically the iShares Russell 2000 Value ETF (IWN), struggle, dropping over 10%. Analysts, like John Higgins from Capital Economics, suggest that easing economic anxieties could offer small caps a lifeline, though technical indicators remain negative. This divergence highlights critical shifts in the financial landscape. News Directory 3 provides timely insights into these market dynamics. Discover what’s next for these equity factors, including the future of small-cap stocks.
Momentum Strategies Dominate US Stock Market’s Equity Factor Results
Updated June 04, 2025
the US stock market’s recent recovery has propelled momentum strategies to the forefront of equity factor performance this year. The iShares MSCI USA Momentum Factor ETF (MTUM) has surged by 13.5% year-to-date, substantially outperforming the broader equity market, as measured by the SPDR S&P 500 ETF Trust (SPY), wich is up only 2.0%.
factor performance in 2025 is mixed, with roughly half of the strategies still experiencing losses. Small-cap equities have faced the most important setbacks. The iShares Russell 2000 Value ETF (IWN) has declined by more than 10%.
The struggles of small-cap stocks persist, tho some analysts foresee potential opportunities.John Higgins,chief markets economist at Capital Economics,suggested that easing concerns about the US economy could provide some relief for small-cap equities,despite ongoing trade war uncertainties. However, he cautioned that this might not be enough to trigger a sustained turnaround in their relative performance.
The technical outlook for small caps remains negative, suggesting continued challenges in the near term.This trend has been observed for several years, with small-cap equities consistently underperforming expectations.
“[U.S. small-cap] equities could conceivably be in for an easier time if worries about the US economy ease. That is something we envisage, despite potential flashpoints in the trade war in the coming months. It may not be enough, however, to trigger a lasting turnaround in their relative performance.”
What’s next
Until the technical picture for small caps improves, a significant turnaround appears unlikely. Investors will continue to monitor economic indicators and market trends to assess potential shifts in factor performance and small-cap equity valuations.