Momentum benchmarks have done quite well in 2025- what does this mean for the back half of the year?
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.
