Momentum ETFs Hit New 52-Week Highs
Wall Street has been on a remarkable rally powered by strong corporate earnings, AI developments and renewed confidence in the tech sector. The latest phase of the rally is driven by Nvidia’s NVDA blockbuster earnings, which pushed the major indexes to key milestones last week. The blue-chip Dow Jones reached a new record high while the S&P 500 broke above 5,100 for the first time. The tech-heavy Nasdaq Composite Index also touched a new 52-week high.
The rally has been broad-based this year, with momentum investing emerging as a big winner. While there are several options in this space, we have highlighted five ETFs that hit new highs in the latest trading session. These include Invesco S&P 500 Momentum ETF SPMO, iShares MSCI USA Momentum Factor ETF MTUM, Qraft AI-Enhanced U.S. Large Cap Momentum ETF AMOM, SPDR S&P 1500 Momentum Tilt ETF MMTM and JPMorgan U.S. Momentum Factor ETF JMOM. These ETFs seek higher returns in a short spell and will continue their outperformance if the same trends prevail.
Nvidia’s Surge
This leading U.S. chip maker surpassed $2 trillion in market capitalization following its robust results. It exceeded fourth-quarter earnings and revenue expectations. The company reported a staggering 265% increase in revenues and provided an optimistic outlook, indicating a surge in demand for AI hardware. This not only showcased Nvidia's robust position in the AI chip market but also signaled promising prospects for the semiconductor industry in 2025 and beyond (read: Nvidia Drives AI and Semiconductor Stocks: ETFs to Gain).
Nvidia has been the biggest beneficiary of technology companies' race to build AI into their products and services.
Why Momentum?
Momentum investing aims to capitalize on the continuance of an existing market trend. It involves the purchase of assets that have been showing an upward trend in price or selling short assets that have been showing a downward trend, with the expectation that the trend will continue. As such, investors can potentially achieve high returns by buying stocks in an uptrend and selling them when they show signs of reversing.
Numerous studies have demonstrated the effectiveness of momentum as a factor in stock selection. Momentum strategies have historically performed well across different markets and time periods, although past performance is not indicative of future results.
ETFs in Focus
Invesco S&P 500 Momentum ETF (SPMO) – Up 16.7%
Invesco S&P 500 Momentum ETF tracks the S&P 500 Momentum Index, which measures the performance of stocks in the S&P 500 index that have a high "momentum score.” It holds 101 securities in its basket and charges 13 bps in fees per year. Information technology is the top sector with a 26.1% share, while healthcare, industrials and communication services round off the next three with double-digit exposure each. Invesco S&P 500 Momentum ETF has AUM of $610.1 million.
iShares MSCI USA Momentum Factor ETF (MTUM) – Up 15%
iShares MSCI USA Momentum Factor ETF follows the MSCI USA Momentum SR Variant Index, holding 123 stocks and exhibiting a relatively higher price momentum. It is skewed toward the information sector at 41.6%, while communication, industrials, and consumer discretionary round off the next spots with double-digit exposure each. iShares MSCI USA Momentum Factor ETF has accumulated $9.7 billion in its asset base and charges 15 bps in fees per year (read: 5 ETFs at All-Time Highs as S&P 500 Rally Continues).
Qraft AI-Enhanced U.S. Large Cap Momentum ETF (AMOM) – Up 13.6%
Qraft AI-Enhanced U.S. Large Cap Momentum ETF is an actively managed exchange-traded fund that seeks capital appreciation by investing in stocks that exhibit higher price momentum. It holds 50 stocks in its basket. Technology is the top sector with a 48.6% allocation, followed by healthcare, consumer cyclical and industrials. Qraft AI-Enhanced U.S. Large Cap Momentum ETF has accumulated $15.5 million in its asset base and charges 75 bps in annual fees.
SPDR S&P 1500 Momentum Tilt ETF (MMTM) – Up 10.1%
SPDR S&P 1500 Momentum Tilt ETF offers exposure to the stocks exhibiting the strongest momentum characteristics by tracking the S&P 1500 Positive Momentum Tilt Index. It holds 1,462 stocks in its basket, with key holdings in information technology, consumer discretionary and communication services. SPDR S&P 1500 Momentum Tilt ETF has amassed $92.8 million in its asset base and charges 12 bps in annual fees from investors (read: 5 Sector ETFs Beating the Market Halfway Through Q1).
JPMorgan U.S. Momentum Factor ETF (JMOM) – Up 9.9%
JPMorgan U.S. Momentum Factor ETF is designed to provide equity exposure with a focus on companies with strong risk-adjusted momentum and the potential to enhance returns. It follows the JP Morgan US Momentum Factor Index and holds 302 stocks in its basket. Technology is the top sector at 33%, while consumer discretionary, industrials, healthcare, and financials round off the next spots with double-digit exposure each. JPMorgan U.S. Momentum Factor ETF has AUM of $495.4 million and charges 12 bps in annual fees.
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
iShares MSCI USA Momentum Factor ETF (MTUM): ETF Research Reports
Invesco S&P 500 Momentum ETF (SPMO): ETF Research Reports
JPMorgan U.S. Momentum Factor ETF (JMOM): ETF Research Reports
SPDR S&P 1500 Momentum Tilt ETF (MMTM): ETF Research Reports
QRAFT AI-Enhanced U.S. Large Cap Momentum ETF (AMOM): ETF Research Reports
