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Record ETF inflows and a new fee war in the Nasdaq 100 category were among the highlights on this week's ETF Prime. Host Nate Geraci welcomed Todd Rosenbluth, head of research at VettaFi, followed by Brian Walsh, head of advice and planning at SoFi.
The iShares MSCI USA Momentum Factor ETF (NYSEARCA:MTUM) has run hard this year, climbing 30% year to date and 38% over the past 12 months to roughly $326.
Despite numerous reasons why investors might expect otherwise, 2026 appears to be off to an excellent start across many parts of the market. As evidenced by strong earnings growth often topping analyst expectations, hearty revenue growth, and continued elevation in profit margins, a market buoyed by AI investment has thrived.
Physics tells us that something in motion stays in motion. With a month-to-date gain of 7.4% for momentum, according to data from S&P Global, other style-box factors essentially got out of momentum's way.
While momentum, growth, and high-beta strategies have served as the engines driving quarter-to-date returns for factor ETFs, a subtle shift under the hood suggests a potential factor rotation may be underway. Notably, the same sectors that have propelled the broad market higher this quarter encountered a sharp reversal over the past two trading sessions.
The iShares MSCI USA Momentum Factor ETF offers concentrated exposure to large-cap momentum stocks, heavily overweighting technology and industrials. MTUM trades at a 7.1% P/E premium to the S&P 500, justified by superior historical earnings (18.5% vs. 10.1%) and sales growth. Performance is uneven year-to-year, with above-market volatility (3-year beta 1.26) and returns that are not tightly correlated with broad equity indexes.
iShares MSCI USA Momentum Factor ETF delivered a 12% YTD return, outperforming the S&P 500 by nearly 8%, and maintains a Buy rating. MTUM's strategy targets 120–130 stocks with high 6–12 month risk-adjusted momentum, rebalancing quarterly to manage risk and capture uptrends. The ETF is heavily weighted in technology (notably semiconductors and AI), industrials (especially aerospace & defense), and large diversified banks.
The momentum factor is alive and well, reaching levels of outperformance this month despite languishing for much of the first quarter. According to research data as of April 24, the underlying index in the Invesco S&P 500 Momentum ETF (SPMO) is having its best month since launching in November 2014.