May 17, 2025
Welcome to your weekly overview of momentum trends in Equity and Fixed-Income ETFs.
Growth ETFs Surge: Broad Market Momentum Turns Positive
Data is the Narrative
The 3-month ROC heat map reveals a notable shift in the week ending May 16, 2025. After weeks of negative territory, 11 out of 17 ETFs transitioned from negative to positive ROC, underscoring a significant shift in market sentiment.
Current Leaders:
SPDR Portfolio S&P 500 Growth (SPYG) tops the list with a 7.8% 3-month ROC, trailed by SPDR S&P 400 Mid Cap Growth (MDYG) at 6.3% and Invesco QQQ Trust (QQQ) at 6.2%. The dominance of growth-oriented ETFs signals a pronounced style rotation from previous weeks.
Week-Over-Week Gains:
SPYG saw the most substantial improvement, rising 11.7 percentage points from -3.9% to 7.8%. Other notable gains include iShares Russell 1000 Growth (IWF) with an 11-point increase and QQQ with a 10-point uptick.
Distance from Troughs:
Six ETFs have reached their 3-month momentum peaks: SPY, QQQ, SPYG, IWF, SPYV, and MDYG. Vanguard Emerging Markets (VWO) shows the strongest percentage recovery from its trough, followed by iShares MSCI EAFE (EFA).
Momentum Flips:
Eleven ETFs flipped from negative to positive ROC in the past week, a rare breadth of change. This group includes large-cap (SPY, QQQ), growth (SPYG, IWF), mid-cap (MDYG, MDYV), and small-cap (SLYG, IWM) exposures, highlighting the spread of positive momentum across market caps.
Value vs. Growth:
Despite growth ETFs rising to the top, value ETFs (SPYV, SLYV) remain weaker, with SPYV at -0.8% and SLYV showing the lowest overall momentum at -2.2%. Dividend-focused ETFs (VYM, SDY, DVY) continue to exhibit minimal or negative momentum.
International Scene:
International exposures present mixed signals: EFA displays strong momentum but decelerated by 2.1 points week-over-week, while VWO maintains positive momentum but with the lowest acceleration among positive ETFs.
Our Take:
Momentum data points to a synchronized rotation toward growth-oriented ETFs across market caps. The sharp recovery in growth indices suggests a change in market dynamics rather than a gradual shift. While value and dividend strategies lag, their week-over-week improvements indicate a broadening positive momentum. This marks one of the most significant transitions in recent months, with growth ETFs firmly in the lead.
International and High-Yield Bonds Lead Recovery While Long-Term Treasuries Lag
Data is the Narrative
The 3-month ROC heat map for fixed-income ETFs indicates a momentum shift in the week ending May 16, 2025, with 7 out of 10 ETFs now showing positive 3-month ROC values.
Current Leaders:
Vanguard Total International Bond (BNDX) tops the list with a 1.6% 3-month ROC, followed by Vanguard Short-Term Corporate Bond (VCSH) at 0.9% and iShares 3-7 Year Treasury Bond (IEI) at 0.8%. BNDX not only leads but has also reached its 3-month momentum peak this week, highlighting its international exposure as a key factor in the current bond landscape.
Week-Over-Week Improvements:
SPDR Bloomberg High Yield Bond (JNK) posted the largest gain, rising 1.7 percentage points from -1.0% to 0.7%. BNDX and iShares JPMorgan USD Emerging Markets Bond (EMB) also advanced by 1.6 points each. JNK and EMB are the only two ETFs to flip from negative to positive ROC this week, underscoring their recent momentum shift.
Momentum Acceleration:
Despite remaining in negative territory, iShares 20 Plus Year Treasury Bond (TLT) shows the strongest acceleration, moving from -4.8% to -3.5% ROC – a notable change given its prior downtrend. Every ETF in the dataset accelerated this week, with none showing deceleration.
Peaks and Troughs:
BNDX and JNK currently sit at their 3-month momentum peaks, signaling renewed strength. In contrast, iShares Core US Aggregate Bond (AGG) has slipped from its March peak of 3.6% to a slight -0.1%. JNK’s recovery is the most pronounced, climbing 3.6 points from its low.
Sector Divergence:
Long-duration bonds continue to underperform, with TLT trailing the group at -3.5% ROC despite its notable acceleration. Corporate bonds present a mixed picture – investment-grade LQD remains slightly negative at -0.3%, while high-yield JNK has flipped to positive at 0.7%.
Our Take:
Momentum data points to a broad recovery across fixed-income ETFs, with international and high-yield bonds driving the positive shift. The synchronized momentum gains suggest a potential turning point in sentiment. The divergence between shorter-term and long-term bonds underscores the role of duration as a key performance factor. The shift to positive ROC in high-yield and emerging market bonds signals a growing risk appetite, though the continued underperformance of long-term treasuries highlights lingering rate or inflation concerns in the bond market.
Happy Long-Term Investing!