JPMorgan: Momentum Stocks Return 35% YTD, Significantly Outpacing Quality Stocks
N.R. Finch
JPMorgan data shows the MSCI Momentum Index returned 35.3% year-to-date versus just 10.1% for the MSCI Quality Index — the gap blew open after the March low as capital piled into semiconductor and AI leaders, reshaping the factor-investing landscape.
What are momentum and quality actually competing on?
Momentum — buying stocks that have been rising the hardest — returned 35.3% YTD. Quality — picking firms with stable earnings and low debt — managed just 10.1%.
This means → the market this year is rewarding "winners keep winning," not "solid fundamentals."
The two tracked almost identically early in the year. The March low was the inflection point; momentum pulled away sharply after that.
Who is driving the momentum surge?
Inside the momentum ETF (MTUM), the top gainers are all semiconductor and industrial leaders: Micron (MU) +324%, Intel (INTC) +282%, AMD +158%.
Lam Research (LRCX) gained 139%, Caterpillar (CAT) 78%, GE Vernova (GEV) 73% — spanning chip equipment to heavy industry.
In plain terms = momentum landed on the AI-infrastructure buildout theme this year and rode it.
Why did quality stocks fall behind?
The quality ETF (QUAL) holds some big semiconductor winners too: Applied Materials (AMAT) +149%, Lam Research (LRCX) +139%, KLA (KLAC) +122%.
But the drag came from mega-cap tech: Nvidia (NVDA) up only 11.9%, Apple (AAPL) +9.3%, Meta −14.6%, Microsoft (MSFT) −24%.
This reflects a broader problem: quality's heavy weighting in large-cap tech backfired this year, and a few semiconductor winners could not offset the mega-cap drag.
Can this gap last?
Momentum's lead rests on one assumption: AI-related investment stays hot. A style rotation would hit trend-following strategies first.
Quality's dilemma is equally clear: if its mega-cap tech holdings keep weakening, "good company" does not automatically mean "good return."
This means → the core call for factor investors in the second half is whether the AI trade is at halftime or in the final quarter — the answer decides which factor wins.
Content is for reference only, not financial advice.