S&P Factor Performance Highlights Momentum in June & Q2

Full Steam Ahead For Momentum

Equity factors don't often move in perfect lockstep, and the performance data for June and Q2 further underscores this tactical shift. Financial news headlines might be focused on a rotation into cyclical value and small caps, but momentum continues to dominate the field. Juxtaposed with the broader S&P 500 Index, which lost 95 basis points in June though up 15.2% quarter-to-date (QTD), momentum has been nothing short of full steam ahead.

The dominance of the momentum factor translated into a strong month and quarter for the Invesco S&P 500 Momentum ETF (SPMO). With a scant expense ratio of 13 basis points and close to 100 holdings that score high on momentum, the fund is up over 30% thanks to its semi-annual rebalancing on March 20. As a result, the chart below highlights the visual spike in performance to start the month of April, driven largely by the momentum of semiconductor names like Micron, Nvidia, and Broadcom as investors piled into names benefiting from the artificial intelligence (AI) infrastructure buildout.

SPMO data by YCharts

See More: Mind the Momentum ETFs: SPMO, MTUM Having Strong Month

Quality and Dividends Gain in June

A closer under-the-hood examination revealed that quality was the runner-up performer in June with a 5.9% gain for the S&P 500 Quality Index. Acting as sort of a running mate to quality was the dividend factor as the S&P 500 Dividend Aristocrats gained 5.3%. Both quality and dividend-producing stocks have given investors a defensive hedge amid the heavier volatility of a global tech rout that started in June.

Tracking the quality factor is the Invesco S&P 500 Quality ETF (SPHQ). The fund also boasts a low expense ratio of just 15 basis points while building a portfolio of stocks that score high on quality. The fund just rebalanced last month, and features quality holdings such as Lam Research Corp, Visa, and Mastercard.

Those looking to build on the safety of stable dividends in blue chips will want to get exposure to the ProShares S&P 500 Dividend Aristocrats ETF (NOBL). The fund dips into the S&P 500 universe to build a portfolio of stocks (69 holdings as of May 31, 2026) that have paid and grown their dividends for over 25 years. It pairs nicely with a quality factor given a focus on recurring cash flows and strong balance sheets.

NOBL data by YCharts

Growth Gets Stunted in June

Among all the S&P factors, growth was the only loser in June. The S&P 500 Growth Index slid into negative territory at -1.76%, which largely had to do with the aforementioned tech rout that ensued last month. Momentum's strong performance in June was evidence that investors have been favoring pure price velocity versus traditional growth buckets.

As noted, other factors were in the green, showing a mixed bag of performance. The S&P 500 Enhanced Value Index notched 2.37% though the standard S&P 500 Value Index was almost flat with a 0.05% gain. The S&P Low Volatility Index gained 3.94%, giving investors a way to dampen the market shocks of the tech rout through the Invesco S&P 500 Low Volatility ETF (SPLV).

There's been much said about the market broadening out, which may have been representative in the performance of the S&P 500 Equal Weight factor gaining 2.38% in June. In effect, this benefited the Invesco S&P 500 Equal Weight ETF (RSP), which provides an ideal entryway for those who think the market is participating in a healthy, broader recovery as opposed to an ongoing reliance on top-heavy tech.

Outside of factors, the monthly data also tells a compelling story regarding market capitalization. Despite a higher-for-longer inflationary regime, this didn't stop the S&P SmallCap 600 from gaining 7.29% in June while the S&P MidCap 400 climbed 3.59%. In contrast, the S&P 500 Top 50 showed a retreat in the biggest names with a loss of 4.62% in June. The Small Cap Index was also the best QTD performer of its headline equity index peers with almost a 20% gain.

Hedge Risk With Smart Factors

For advisors and investors alike, June and Q2 performance serves as a reminder that factor leadership can decouple from broad index benchmarks. As noted by the performance of the S&P 500, standard cap-weighted indexes masked the strength seen in momentum (SPMO), quality (SPHQ), and low volatility (SPLV).

With momentum exhibiting independent strength, utilizing strategies like SPMO to capture this prevailing price trend — alongside equal-weight configurations (RSP) and stable dividend exposure (NOBL) — this is a vital step toward protecting clients against index concentration risk while staying exposed to the market's winning drivers.

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