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U.S. stocks spurted to all-time highs on Jan 7 as Congress confirmed the election of Joe Biden as president and market watchers ignored the election-related unrest in Washington.
Democrats took control of Senate and House, which was initially thought to be a little negative for the overall markets. But in reality, the equity rally continues as the Democratic agenda of tax hike is less likely to be enacted at this moment.
Vaccine rollout, the second tranche of virus relief and Saudi’s decision to curb on its own oil production (which may push up oil prices) boosted market sentiments. Moreover, a democratic control in the Congress indicates chances of a fatter fiscal stimulus in the coming days. Meanwhile, the Fed continues to remain super-dovish. Chicago Fed President Charles Evans said, it’s “probably going to be 2024 before we see interest rates start to rise,” per an article.
Why Momentum ETFs With a Value Quotient Should Be Bought?
Such an environment calls for a momentum rally in the short term.Momentum investing might be an intriguing idea for those seeking higher returns in a short spell. It looks to reflect profits from buying stocks that are sizzling on the market.
But looking at value is necessary now. Anew virus strain that has erupted in the United Kingdom and spread to some other parts of the world including the United States, and solid downside risks to the ongoing global economic recovery may derail the stock market momentum any time.
The Organisation for Economic Co-operation and Development said that in some countries, the initial impact of COVID-19 on labor markets were “ten times larger than that observed in the first months of the 2008 global financial crisis,” as quoted on CNBC.
Plus, with the risk-on sentiments taking an upper hand from late 2020, value stocks started prevailing over growth and momentum ones. Below we highlight a few momentum ETFs that have a P/E below 23.79 times of SPDR S&P 500 ETF Trust (SPY - Free Report) .
ETFs in Focus
Cambria Value and Momentum ETF (VAMO - Free Report) ) – P/E 9.50X
This ETF is active and does not track a benchmark. The fund charges 64 bps in fees. However, the ETF has a small asset base of $11.9 million.
Invesco S&P MidCap Value with Momentum ETF (XMVM - Free Report) ) – P/E 12.83X
The underlying S&P 400 High Momentum Value Index is composed of securities with strong value characteristics selected from the Russell Midcap Index.The fund charges 64 bps in fees and has an asset base of $73.4 million.
Invesco S&P 500 Value with Momentum ETF (SPVM - Free Report) ) – P/E 13.36X
The underlying S&P 500 High Momentum Value Index is composed of securities with strong value characteristics selected from the Russell Top 200 Index. The $36.3 million-fund charges 39 bps in fees.
The underlying Russell 1000 Momentum Focused Factor Index reflects the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors with a focus factor, comprising high-momentum characteristics. The $249.7 million-fund charges 20 bps in fees.
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4 Momentum ETFs That Still Offer Value
U.S. stocks spurted to all-time highs on Jan 7 as Congress confirmed the election of Joe Biden as president and market watchers ignored the election-related unrest in Washington.
Democrats took control of Senate and House, which was initially thought to be a little negative for the overall markets. But in reality, the equity rally continues as the Democratic agenda of tax hike is less likely to be enacted at this moment.
Vaccine rollout, the second tranche of virus relief and Saudi’s decision to curb on its own oil production (which may push up oil prices) boosted market sentiments. Moreover, a democratic control in the Congress indicates chances of a fatter fiscal stimulus in the coming days. Meanwhile, the Fed continues to remain super-dovish. Chicago Fed President Charles Evans said, it’s “probably going to be 2024 before we see interest rates start to rise,” per an article.
Why Momentum ETFs With a Value Quotient Should Be Bought?
Such an environment calls for a momentum rally in the short term. Momentum investing might be an intriguing idea for those seeking higher returns in a short spell. It looks to reflect profits from buying stocks that are sizzling on the market.
But looking at value is necessary now. Anew virus strain that has erupted in the United Kingdom and spread to some other parts of the world including the United States, and solid downside risks to the ongoing global economic recovery may derail the stock market momentum any time.
The Organisation for Economic Co-operation and Development said that in some countries, the initial impact of COVID-19 on labor markets were “ten times larger than that observed in the first months of the 2008 global financial crisis,” as quoted on CNBC.
Plus, with the risk-on sentiments taking an upper hand from late 2020, value stocks started prevailing over growth and momentum ones. Below we highlight a few momentum ETFs that have a P/E below 23.79 times of SPDR S&P 500 ETF Trust (SPY - Free Report) .
ETFs in Focus
Cambria Value and Momentum ETF (VAMO - Free Report) ) – P/E 9.50X
This ETF is active and does not track a benchmark. The fund charges 64 bps in fees. However, the ETF has a small asset base of $11.9 million.
Invesco S&P MidCap Value with Momentum ETF (XMVM - Free Report) ) – P/E 12.83X
The underlying S&P 400 High Momentum Value Index is composed of securities with strong value characteristics selected from the Russell Midcap Index.The fund charges 64 bps in fees and has an asset base of $73.4 million.
Invesco S&P 500 Value with Momentum ETF (SPVM - Free Report) ) – P/E 13.36X
The underlying S&P 500 High Momentum Value Index is composed of securities with strong value characteristics selected from the Russell Top 200 Index. The $36.3 million-fund charges 39 bps in fees.
SPDR Russell 1000 Momentum Focus ETF (ONEO - Free Report) ) – P/E 19.78X
The underlying Russell 1000 Momentum Focused Factor Index reflects the performance of a segment of large-capitalization U.S. equity securities demonstrating a combination of core factors with a focus factor, comprising high-momentum characteristics. The $249.7 million-fund charges 20 bps in fees.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>