Momentum Funds Beat S&P 500 by 12 Points as Winner-Loser Gap Hits 35 Points

5 articles · Updated · Business Insider · May 12

The iShares MSCI USA Momentum Factor ETF has climbed more than 20% in 2026, outpacing the S&P 500’s 8% gain as momentum strategies lead in the US, Europe and Japan.
SocGen said the outperformance is being driven by an unusual split between market winners and losers, with the spread between energy—the best sector—and health care—the worst—reaching 35 percentage points this year.
That divergence has widened with the AI rally and intensified during the Iran war, as higher oil prices boosted energy shares while fears over AI disruption, hotter inflation and geopolitical conflict weighed unevenly across the market.
SocGen said the negative correlation between long and short momentum portfolios has persisted since October, a rare pattern it said has previously been sustained mainly during shocks such as the Covid pandemic.

If peace breaks out in Iran, will winning energy stocks collapse while the healthcare sector makes a dramatic comeback?

Can the AI boom power the economy without causing the stagflation and financial instability that experts now fear?

How can investors sidestep the inevitable crash when today's 'extremely rare' momentum-driven market finally breaks?