U.S. momentum stocks lead factor returns through June

Momentum stocks have been the standout factor trade in the U.S. this year, according to research cited by A Wealth of Common Sense. For everyday investors, that means funds or strategies tilted toward stocks with strong recent gains may look very different from diversified market exposure in 2026.

The momentum factor in the U.S. is up roughly 30% to 40% this year through the end of June, depending on how it is measured, according to A Wealth of Common Sense. The firm said U.S. momentum is ahead of other tracked factors, including low volatility, value, quality, shareholder yield and growth.

Factor investing means grouping stocks by a shared trait, then building a portfolio around that trait. Momentum is one of the simpler ideas to describe: it favors stocks that have already been rising and keeps exposure until those trends fade. The appeal is behavioral. Investors often chase performance, react slowly to new information or crowd into stocks with improving sentiment, which can help recent winners keep rising for a time.

That simplicity can also make momentum feel uncomfortable. The strategy depends on price trends continuing, and A Wealth of Common Sense noted that no factor works in every period.

International stocks show a different pattern

The firm’s research team compared several factors across U.S. and international stocks through June. Momentum has also worked in foreign markets this year, according to the research, but the broader pattern differs from the U.S.

A Wealth of Common Sense said international stocks are outperforming U.S. stocks in every factor category it tracked except momentum. In other words, while U.S. momentum has been the clear leader in the factor table, foreign stocks have had stronger results across the rest of the factor lineup.

The firm also pointed to value’s performance as a notable part of the recent data. Value stocks, which typically trade at lower prices relative to measures such as earnings or book value, beat growth stocks in 2025 and have done so again so far in 2026, according to A Wealth of Common Sense. Growth stocks are companies expected to increase sales or earnings faster than the broader market.

Last year’s winners looked different

The 2026 factor ranking is a sharp shift from 2025, according to the same research. Last year, shareholder yield, overseas value and international low-volatility stocks had strong results. Shareholder yield is a value-oriented measure that looks at companies returning capital through dividends, share buybacks and debt reduction, according to A Wealth of Common Sense.

In the U.S., growth outpaced momentum in 2025, the firm said. This year, momentum has moved ahead of growth by a wide margin.

A Wealth of Common Sense compared the pattern to a quilt of asset-allocation returns, where leadership changes from year to year. The firm said factor returns can rotate without warning: some strategies can lead or lag for long stretches, while others move between the top, middle and bottom of the rankings.

The main takeaway is about uncertainty rather than prediction. Momentum could keep leading through the rest of the year, or it could reverse if the stocks behind the trend lose support, according to A Wealth of Common Sense. The firm said choosing winning factors in advance can be nearly as difficult as choosing winning individual stocks.

This story draws on original reporting from A Wealth of Common Sense.