SPMO Owns the S&P 500’s 100 Fastest-Rising Stocks. Its Momentum Screen Has Beaten the Index by 67-Points Over the Last Five Years
A simple momentum screen applied to S&P 500 stocks has quietly built a performance gap that turns identical starting portfolios into dramatically different ending balances, and the strategy costs almost nothing to implement.
Owning the S&P 500 has proven to be one of the simplest ways to build wealth over the long-term. But one ETF has taken the same pool of large-cap stocks, applied a momentum screen, and produced substantially better results over the last five years. The Invesco S&P 500 Momentum ETF (NYSEARCA:SPMO) has returned 137.81% cumulatively over the last five years, working out to just shy of 20% annualized. By comparison, the S&P 500 has returned 70.27% over the same period, or approximately 13% annualized. This momentum-driven performance advantage results in two portfolios with drastically different ending values.
SPMO Starts With the S&P 500
SPMO does one thing, and it does it very well – momentum.
SPMO does not venture into small-cap stocks, obscure technology companies, or speculative names looking for the next market winner. Rather, it starts with companies already included in the S&P 500 and tracks the S&P 500 Momentum Index.
The index selects roughly 100 stocks with the strongest momentum scores and reconstitutes and rebalances twice per year, in March and September. The idea behind the strategy is straightforward: stocks that have demonstrated stronger recent relative performance may continue outperforming.
Constituents are then weighted using both market capitalization and their momentum scores. SPMO charges an expense ratio of just 0.13%, or roughly $13 annually for every $10,000 invested.
That process currently produces a portfolio that looks considerably different from a traditional S&P 500 fund. Based on current holdings, technology represents roughly 54% of the fund. Names like Micron Technology alone account for more than 11% of assets. Meanwhile, Nvidia represents roughly 9%, followed by Broadcom at more than 6%. Johnson & Johnson, Advanced Micro Devices, Alphabet, and Lam Research are also among its largest positions. Altogether, the top 10 stocks represented just more than half of the portfolio.
The Five-Year Performance Gap Is Hard to Ignore
The results have been impressive. Through August 31, SPMO delivered a five-year annualized return of 19.7%, compared with 12.8% for the S&P 500 Total Return Index. Over three years, the difference was even larger: SPMO returned 37.3% annually compared with 21.0% for the index. The fund has also been ahead in 2026 through August, returning 23.8% against 13.1% for the S&P 500.
Put these numbers into dollars, and the difference becomes easier to appreciate. A hypothetical $100,000 compounded at 19.7% annually for five years grows to roughly $246,000. At 12.8%, the same starting balance grows to about $183,000. That is a difference of more than $60,000 without leaving the universe of stocks already found in the S&P 500.
Momentum Comes with a Different Kind of Risk
While it is tempting to project past results forward, there is no guarantee that the advantage will continue. Momentum strategies naturally concentrate money in stocks and sectors that have already performed well. Today that means heavy exposure to semiconductors and technology. If leadership changes quickly, SPMO can find itself holding yesterday’s winners while the rest of the market rotates elsewhere.
The fund also turns over more aggressively than a plain S&P 500 ETF because the index needs to continually identify new momentum leaders. According to Morningstar, the fund has a recent portfolio turnover of 44%. Investors should therefore view SPMO as more than a slightly modified S&P 500 fund. Its portfolio can become substantially more concentrated, and its results can diverge sharply from the broad index in either direction.
What This Means for You
SPMO has taken roughly 100 stocks from the same S&P 500 universe and generated a significant performance advantage over the past five years. Investors comfortable with greater concentration and the possibility of sharp changes in market leadership may find that paying 0.13% for a systematic momentum screen offers a compelling alternative to simply owning all 500 stocks. For those simply looking for S&P 500 exposure, standard index funds still prove to be an effective way to compound wealth over time.
Contact [email protected] for any questions or corrections.
Ryne Mauck is an investment writer covering exchange-traded funds, retirement planning, and portfolio strategy. Through his work at 24/7 Wall St. and other investment platforms, including Seeking Alpha, he aims to provide clear, research-driven insights that help investors make more informed decisions while maintaining a long-term approach to investing.
Ryne holds a B.Sc. in Finance and an M.A. in Political Science. He is a formerly registered Municipal Advisor Representative and has passed the Series 50, Series 63, and Series 65 exams. His articles are not intended to be, nor should they be interpreted as, financial advice.
