Growth, Momentum ETFs Gain Ground

September 18, 2017

 

 

Momentum ETFs Different

In momentum, however, the segment seems to be heavily dominated by one ETF, the iShares Edge MSCI USA Momentum Factor ETF (MTUM), which has nearly $4 billion in assets, and has attracted nearly five times as many assets this year as the second-most-popular momentum ETF.

Other large issuers such as Vanguard and Schwab don’t really have a presence in momentum-specific investing. State Street has one fund, the SPDR S&P 1500 Momentum Tilt ETF (MMTM), which has only $21 million in total assets.

In this segment, it’s PowerShares that has the biggest number of momentum funds—16—offering sector- and region-specific portfolios focused on momentum. They are all smaller, and some of these funds have actually seen net outflows in 2017.

A look at the biggest asset gatherers in this segment this year show a precipitous disparity in net inflows already in the top three, as you can see below.

Top Momentum ETFs In Asset Flows

MTUM looks for stocks with steady price increases. The fund tracks an index of large- and midcap U.S. stocks selected and weighted based on price appreciation over six- and 12-month periods, and low volatility over the past three years. Nearly 60% of the portfolio is tied to technology and financials. The fund has an expense ratio of  0.15%.

EEMO offers investors the opportunity to capture momentum in emerging market stocks, with a portfolio that looks at 12-month stock price performance minus the most recent month, adjusting for volatility. The fund has $370 million in total assets gathered in more than five years. Also technology and financials heavy, EEMO costs 0.29%.

PTLC tracks an index that toggles between U.S. large-cap stocks and three-month T-bills based on momentum. According to FactSet data, when the environment is risk-on, PTLC offers access to U.S. large-caps with a bias toward midcaps. Technology and financials are the fund’s largest sector bets at a combined 40% of the mix. The ETF has $547 million in total assets gathered in about two years. 

 

Charts courtesy of StockChart.com

For a complete list of single factor ETFs, look at our Smart-Beta ETF channel.

Contact Cinthia Murphy at [email protected]

 

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