2025 has left us no shortage of things to talk about. From big exhales to even bigger rebounds, the quick pace at which markets are moving leaves us chartists with one question: What does all of this mean for momentum? As we typically do around quarterly landmarks, we will take today’s report as an opportunity to peak behind the curtain as how momentum strategies are doing so far this year… and what this might mean as we work our way further into 2025.

We will start our commentary with a quick comment on representative MTUM, which has advanced just over 11% so far in 2025. Breaking to new all-time highs with May’s chart action, the fund holds a strong 5.70 fund score as of 6/20. While traditional support isn’t seen until the upper $180’s, bulls do have a couple of important battlegrounds in between- most notably old resistance around $200. All this to say, the absolute picture for momentum has remained rather resilient despite all of the back-and-forth action markets have brought our way so far.

Of course, absolute performance is only part of the picture. We can also use history as a guide, diving deeper into how often a strong first half of the year is followed by more of the same in the back half. Last year, MTUM had bested benchmark SPX by a similar margin through the first half of the year before waning off into the close, underperforming the broader market by roughly 1.5% from 6/30/24-12/31/24. This was a buck of the trend, however, with a strong first half more often than not leading to more of the same as we expand our dataset to the early 90’s. Of the 26 instance of first outperformance (excluding 2025) MTUM continued to beat the market in the back half of the year in 15 of those periods… just under 60% of the time. While this is far from an earthshattering hit rate, it adds to the weight of the evidence during an already strong momentum market. When MTUM continued to outperform, it did so by an average of 5.18%. Including “misses”, that average falls to just under 2% excess return over SPX in the back half of the year.

The chart on the right above details historical MTUM performance across each quarter. Quarterly performance falls roughly in line with what you may expect- Q3 is typically the worst (as is the same with broader markets,) followed by a strong close to the year. It is important to remember that history is just that- actual performance is almost never “average.” Despite this, having an idea of where markets may be heading can help you give more clarity to your clients… something they will appreciate as markets continue to swing this year.  

Next week marks the last full week of June, and while the S&P 500 (SPX) won’t be up double digits through the first half 2025 like the prior two years, the index is still positive through Wednesday’s close (6/18). Equity indices are positive so far in the month of June, but today we want to focus solely on the month of July. A few key points:

• Since 1987, June has produced more muted returns than July, but when June returns for SPX have been positive, July has also been positive 65% of the time (since 1987).
• Despite landing in the middle of summer, which has historically been an uneventful season, the S&P 500 is positive 64% of the time since 1987, better than other summer months (June & August)
• July during the first year of the President’s term have been better than average. Since 1928, SPX has averaged roughly 2.3% in July and produced positive returns 67% of the time during the first year of a President’s term.

The top chart below shows the average, max, and minimum S&P 500 return for each month since 1987. Notice that July has the “best minimum" return of all months and the highest max return of the summer months (June to August). The bottom chart shows the average, max, and minimum rolling three-month return for the S&P 500. March through May has historically been one of the best streaks for stocks, but April through June and May through July also stand above most other stretches in terms of max return.

Recent years have seen the month of July continue a historic streak of positive returns with July 2024 marking 10 straight years. While impressive, this 10 year run ranks 2^nd since 1928 in terms of streaks of positive returns during July – the longest being an 11-year period from 1948 to 1959. Despite a period in the mid 1940s, July produced a positive return in 20 out of 25 years from 1935 to 1959.

Given the current streak of a decade of positive returns in July, investors will seek another positive month to match the all-time streak. Looking back to 1928, when July has produced a positive return (59 years) the second half of the year – from end of July to end of December - has finished positive 76% of the time (45 years) with an average return of 8.5% for the S&P 500.

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