LIVE MARKETS-In a photo finish, growth edged momentum in 2025

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IN A PHOTO FINISH, GROWTH EDGED MOMENTUM IN 2025

2025 was a momentous year for the S&P 500 index. That is, the benchmark index went from record highs in mid-February, to near bear-market lows in early April on a closing basis, to fresh record highs, most recently in December.

Given the renewed risk-taking that prevailed for most of the second half of the year or so, it's perhaps no surprise that when it comes to major style factors that have historically driven portfolio returns that growth and momentum galloped to the front of the pack.

However, in the end, growth edged momentum to finish at the top of the investment style factor tote board for the year.

Major investing style factors include stocks discounted to their fundamentals (value), financially sound companies (quality), size (small caps), stable, lower-risk stocks (low volatility), and stocks exhibiting upward price trends (momentum).

To this, let's add in as separate factors mid- and large-caps, high-growth companies (growth), and those stocks that provide income (dividends).

The S&P 500 index .SPX rallied nearly 5% into its February 19 then-record closing high. It then collapsed nearly 20% into its April 8 closing low before surging nearly 40% into its December 24 record closing high. At the 2025 finish line, the benchmark index ended up 16.4%, while advancing for a third-straight year.

Meanwhile, the SPDR S&P 500 ETF Trust SPY.P also ended up 16.4% for the year.

Here is a graphic showing 2025 YTD factor ETF percentage changes as well as how they performed vs the SPY (factor/SPY ratio change):

Growth SPYG.P won the race with a 21.4% advance in 2025. Momentum MTUM.K finished a close second with a 21% gain. Of note, as of the end of November, both of these ETFs had heavy tech .SPLRCT exposure (60.5% for growth and 55% for momentum).

Large caps SCHX.K ended up 16.1%, which was roughly flat with the SPY.

Quality QUAL.K, small caps IWM.P, and value SPYV.P all underperformed the SPY and were closely bunched with gains of 11.5%, 11.4%, and 11.1%.

Also underperforming the SPY, and bringing up the rear, were mid-caps IJH.P, dividends NOBL.K, and low volatility SPLV.P up 5.9%, 4.5% and 2.0%.

2025 marked the second time out of the last three years that growth was the top factor performer.

That said, traders are eyeing recent relative strength shifts, which have seen the equal-weighted S&P 500 .SPXEW outperform the cap-weighted index and value .IVX outperform growth .IGX.

(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)