
Momentum factor ETFs are a type of investment strategy that focuses on stocks with a history of strong price movements.
These ETFs aim to capture the returns of stocks that have been rising in price over a certain period.
They often use a combination of technical and quantitative factors to identify these stocks, such as price momentum and trend strength.
By investing in momentum factor ETFs, you can potentially benefit from the strong performance of these stocks.
One of the key benefits of momentum factor ETFs is their ability to deliver high returns in rising markets, with some ETFs boasting average annual returns of over 15%.
However, it's essential to keep in mind that momentum factor ETFs can be highly volatile and may experience significant losses in declining markets.
To mitigate this risk, it's crucial to diversify your portfolio and use these ETFs as part of a broader investment strategy.
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What is MTUM?
MTUM stands for Vanguard Momentum ETF, which is an exchange-traded fund that focuses on investing in stocks with a history of strong price momentum.
It was created in 2013 and is designed to track the CRSP US Momentum Index, which is a rules-based index that selects stocks based on their price momentum.
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Fidelity Canadian
Fidelity Canadian funds aim to track the performance of indexes that are actively designed to reflect the performance of stocks with positive momentum signals.
These indexes focus on stocks that have exhibited above-average returns and positive investor sentiment, which have historically outperformed over the medium term.
Fidelity's momentum factor funds seek to provide single-factor exposure to companies that exhibit positive momentum signals.
By following market trends and sentiment, these funds have the potential to outperform over the medium term.
Investment Strategy
Fidelity's momentum factor funds track the performance of tailor-made indexes that are actively designed.
These indexes are built to reflect the performance of stocks that exhibit positive momentum signals.
Stocks with above-average returns and positive investor sentiment have a history of outperforming over the medium term.
An outcome-oriented approach is taken, following market trends and sentiment which has the potential to outperform over the medium term.
Return Comparison of All
The return comparison of all momentum ETFs is a crucial aspect to consider when investing in these funds. The table provided shows the returns of all momentum ETFs in comparison, including dividends as of month end.
The reference date for the comparison is essential, as it can significantly impact the results. Performing a chart comparison can also help find the best ETFs.
The cumulative returns of the ETFs vary significantly, with Xtrackers MSCI World Momentum Factor UCITS ETF 1C and iShares Edge MSCI World Momentum Factor UCITS ETF (Acc) leading the pack with 38.23% and 38.07% returns, respectively.
Here's a brief summary of the top-performing ETFs:
It's worth noting that the Xtrackers MSCI World Momentum ESG UCITS ETF has a slightly lower return of 36.44% over the past year, but it's essential to consider the importance of ESG factors in investment decisions.
The calendar year returns also provide valuable insights, with Xtrackers MSCI World Momentum Factor UCITS ETF 1C and iShares Edge MSCI World Momentum Factor UCITS ETF (Acc) leading the pack with 38.23% and 38.07% returns, respectively.
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Choosing the Best
The momentum factor ETF with the highest 1-year return is the Invesco S&P 500 Momentum ETF, which has returned 36.1% over the past year.
To evaluate the performance of momentum factor ETFs, consider their tracking error. The Invesco S&P 500 Momentum ETF has a tracking error of 4.5%, which is relatively low compared to other funds in the same category.
A low tracking error is a good sign that the fund is doing a good job of following the index it's meant to track.
The Invesco S&P 500 Momentum ETF has a net expense ratio of 0.39%, which is lower than many other momentum factor ETFs.
When choosing a momentum factor ETF, consider the underlying index it tracks. The S&P 500 Momentum Index, which is tracked by the Invesco S&P 500 Momentum ETF, uses a momentum score to select stocks.
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iShares MSCI USA Profile
The iShares MSCI USA Momentum Factor ETF is an exchange traded fund launched by BlackRock, Inc. on April 16, 2013.
It is managed by BlackRock Fund Advisors, which suggests a high level of expertise in managing the fund's investments. The fund invests in public equity markets of the United States.
The iShares MSCI USA Momentum Factor ETF seeks to track the performance of the MSCI USA Momentum SR Variant Index by using a representative sampling technique.
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Frequently Asked Questions
What is the best momentum ETF?
The best momentum ETF is Ishares World Momentum, but consider other factor ETFs like value, min-volatility, or others that diverge from the herd's consensus. Exploring alternative momentum ETFs can help you outperform the market.
What is the average annual return of Mtum?
The iShares Edge MSCI USA Momentum Fctr (MTUM) Portfolio has achieved an average annual return of 13.42% over the past 30 years. This impressive return comes with a moderate level of risk, making it a popular choice for investors seeking momentum-based strategies.
Sources
- https://www.ishares.com/us/products/251614/ishares-msci-usa-momentum-factor-etf
- https://www.seic.com/asset-management/enhanced-factor-etfs/sei-enhanced-us-large-cap-momentum-factor-etf-seim
- https://www.justetf.com/en/how-to/invest-in-momentum-etfs.html
- https://www.investing.com/etfs/ishares-msci-usa-moment-factor
- https://www.fidelity.ca/en/investments/solutions-portfolios/momentum-factor/
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