Momentum strategy outpaces S&P 500 as market winners and losers diverge, SocGen says

Momentum investing has sharply outperformed the S&P 500 in 2026, driven by an unusually wide split between market winners and laggards, Societe Generale said in a May 12, 2026, report. The iShares MSCI USA Momentum Factor ETF has gained more than 20% year to date, compared with about 8% for the S&P 500, according to Business Insider. SocGen said momentum strategies in the U.S., Europe and Japan have posted strong returns, with both long positions in the strongest stocks and short positions in the weakest stocks rising since October 2025. Andrew Lapthorne, SocGen’s head of global quantitative research, said AI-related disruption, rising inflation and geopolitical conflict may be contributing to the widening dispersion. The strongest energy sector and the weakest health care sector are now separated by 35 percentage points in year-to-date returns. Lapthorne warned that such a strong negative correlation between winners and losers is rare and has typically persisted only during unusual periods, including the COVID-19 pandemic.