Momentum stocks are having a moment this year.
Depending on how you define it, the momentum factor in the U.S. is up something like 30-40% this year.
Buying stocks that have been going up has been working really well in 2026.
Our research team put together a chart of performance for the various factors — momentum, low vol, value, quality, shareholder yield and growth — for both U.S. and international stocks through the end of June:
U.S. momentum is crushing everything this year. Momentum is working in foreign stocks too.
Interestingly enough, foreign stocks are outperforming U.S. stocks in every factor but momentum.
Momentum as a factor is fairly straightforward but can be difficult to wrap your head around. Just buy the stocks that have been rising? And keep owning them until they stop going up.
Sometimes this works beautifully for a number of behavioral reasons.
But nothing works all the time.
Just look at these same factor returns for 2025:
The 2026 results look nothing like the 2025 returns.
Last year shareholder yield1, value and low vol stocks overseas went gangbusters.
Growth stocks outperformed momentum in the U.S. Momentum is destroying growth stocks this year.
It’s also surprising to note value beat growth in 2025 and so far in 2026.
Much like the asset allocation quilt of returns, there is no rhyme or reason to factor performance in any given year.
The types of stocks that work in any given year can change without warning. Sometimes these factor strategies can go on extended runs of over- and underperformance. Other times they take turns at the bottom, top and middle.
Momentum stocks very well could continue leading the way for the rest of this year. Or there could be a momentum crash that brings these high flyers back to Earth. That’s typically how it works with momentum driven stocks.
The trend is your friend until the bend in the end and all that.
What about next year? Who knows!
It’s really hard to know which factors will do well and which ones will struggle.
Picking the winning factors ahead of time is nearly as hard as picking the winning stocks.
Short of owning a crystal ball that let’s you in on the secret, you have two options when it comes to dealing with this uncertainty.
You can pick a factor or two and hold them come hell or high water with the understanding that every investment strategy goes in and out of style.
Or you can be diversified enough to capture enough of the winners to offset the losers.
It all depends on your level of patience and appetite for risk.
As always, investing is all about trade-offs.
Further Reading:
Updating My Favorite Performance Chart for 2025
1Shareholder yield is a value factor that looks at companies who are paying dividends, buying back shares and paying down debt.
