The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is the default equity holding for tens of millions of investors, and for defensible reasons: it tracks the S&P 500 at an expense ratio of 0.0945%, offers deep liquidity, and closed at $749.17 on July 13, 2026. Yet SPY holders have quietly missed the market this year. A close cousin, still built from the same 500 stocks, is up more than two and a half times as much year-to-date. The alternative sits within the S&P family, costs about 4 basis points more, and rotates on a rules-based schedule that most SPY owners have never examined.
That fund is the Invesco S&P 500 Momentum ETF (NYSEARCA:SPMO), and the gap between the two in 2026 is the reason to look closely.
Why SPY Still Deserves Its Seat
The fund works because it is boring in the best way. It owns the entire large-cap U.S. market weighted by size, so NVIDIA accounts for 7.58% of the fund, Apple for 6.66%, and Microsoft for 4.91%. Over ten years, the ETF has returned 247.11%, and over one year it is up 20.13%. Anyone building a portfolio around a single equity ticker has done fine.
The shortfall is structural. Because SPY is weighted by market cap, it always owns yesterday’s winners at yesterday’s prices. When leadership shifts within the index, SPY captures the move only as those names increase their share. It cannot lean into what is working now.
Where SPMO Wins in 2026
The momentum fund tracks the S&P 500 Momentum Index, which selects roughly the top 100 S&P 500 names, ranked by risk-adjusted price momentum, and rebalances semiannually. It is the same universe of stocks as the core S&P 500 fund, filtered to include those with the strongest recent trend. The expense ratio is 0.13%, which works out to about $13 per $10,000 invested, versus roughly $9.45 for the flagship fund.
Those extra four basis points have bought a lot this year. SPMO is up 26.03% year-to-date through July 13, 2026, compared with SPY’s 9.86%. On a $50,000 position, that is roughly $13,015 of return for SPMO versus $4,930 for SPY, before the fee difference of about $18. The fee gap is a rounding error next to the performance spread.
The edge has persisted well before 2026. Over one year, SPMO is up 34.6%; over five years, 162.12%; and over ten years, 554.08%. Across the same ten-year window, SPY returned 247.11%. The momentum tilt has compounded meaningfully through multiple regimes, including the 2022 drawdown and the 2025 rotation.
The Trade-Offs SPY Holders Should Weigh
Momentum wins until it does not. The strategy reshuffles at set intervals, so when leadership breaks sharply, SPMO can lag SPY through the turn until the next rebalance repositions the fund. That has already shown up in the short term: SPMO is down 2.12% over the past week, while SPY is down 0.28%. Concentration is also higher. SPMO holds roughly 100 names rather than 500, which means sector bets get large by design.
Turnover matters for taxable accounts. SPMO’s semi-annual reconstitution generates more internal trading than SPY’s near-static index, which can produce larger capital gains distributions in some years. For investors who want a broader read on trend-driven strategies, our team’s Breakout Buyer’s Rulebook lays out the discipline behind buying stocks at new highs rather than reaching for laggards.
How to Consider the Swap
Inside a tax-advantaged account, moving part or all of an SPY position to SPMO is mechanically simple, and the historical return spread makes the case on its own. Inside a taxable account, unrealized gains complicate the decision: selling SPY at $749.17 after a decade of appreciation can create a tax bill that erases the fund’s advantage for years. A partial rotation, or directing new contributions to SPMO while leaving old SPY lots alone, avoids that trap.
What This Says About the Choice in Front of You
The flagship S&P 500 fund remains a legitimate core holding, and its 0.0945% fee is still among the lowest anywhere. The momentum version is the iteration of the S&P 500 that leans into what is already working, and in 2026, that lean has produced 26.03% against the core fund’s 9.86%. Whether that edge continues depends on whether current leadership holds through the next rebalance. For investors weighing exposure to that dynamic without leaving the S&P 500 framework, the momentum fund is sometimes held as a sleeve alongside the core fund, with allocations revisited when leadership shifts.
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