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Expanding it suite of ETF products, ProShares recently launched the ProShares Nasdaq-100 Dorsey Wright Momentum ETF (QQQA). The timing of the launch can turn out to be beneficial for the firm given the optimism surrounding the U.S. economic recovery from the pandemic-led slump.
QQQA in a Nutshell
ProShares Nasdaq-100 Dorsey Wright Momentum ETF seeks investment results, before fees and expenses, which track the performance of the Nasdaq-100 Dorsey Wright Momentum Index. Notably, QQQA is the first ETF focusing on select Nasdaq-100 stocks identified as having the greatest potential to outperform. It is also worth noting here that Dorsey Wright, which is a reputed leader in momentum investing, picks the 21 leading Nasdaq-100 stocks based on a proprietary “Relative Strength” signal.
The fund charges an expense ratio of 58 basis points. Technology (55.5%), Consumer Discretionary (18.7%) and Consumer Staples (10.6%) are the top three sectors with the highest weighting within the fund.
What Makes QQQA an Attractive Pick?
Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months. They have the potential to beat broader market returns in the coming months if the market optimism prevails.
The U.S. economy seems to be strongly rebounding from the coronavirus led-slowdown. Several factors like reopening of the economy, accelerated coronavirus vaccine rollout and solid fiscal support are raising consumer optimism.
Further, the release of strong economic data is instilling optimism. The latest update on U.S. manufacturing output looks impressive as the plants that were impacted by February's severe weather conditions in the south-central region became operational in April. Per the Fed’s recently-released data, total industrial production rose 0.7% in April. Going on, there was a 0.4%, 0.7% and 2.6% rise, respectively, in manufacturing output, mining and utilities production. Total industrial production rose 16.5% year over year in April.
Additionally, the Fed’s continued dovish stance is increasing chances of speedy U.S. economic growth recovery from the coronavirus-induced sluggishness. The central bank decided to maintain rates at near-zero level until 2023 at least. Moreover, the central bank raised its economic growth outlook considering the vaccine and stimulus optimism and it also expects higher inflation this year.
ETF Competition
The fund faces tough competition owing to availability of a wide variety of options for momentum investing. Below we discuss a few ETFs that seek to provide exposure to momentum ETFs:
This fund provides exposure to large and mid-cap stocks that exhibit relatively higher price momentum by tracking the MSCI USA Momentum SR Variant Index. It charges 15 basis points (bps) in fees per year and is a popular choice, with AUM of $13.90 billion (read: ETF Areas That Investors Can Consider for May).
This fund tracks the Dorsey Wright Technical Leaders Index, which measures the performance of companies that demonstrate powerful relative strength characteristics. It has amassed $1.72 billion in its asset base and charges 62 bps in annual fees (read: Top 3 Reasons Why You Should Bet on Momentum ETFs Now).
This ETF follows the S&P Midcap 400 Momentum Index, which is designed to identify mid-cap firms with the highest momentum scores. XMMO has AUM of $915 million and an expense ratio of 0.34%.
VictoryShares USAA MSCI USA Value Momentum ETF (ULVM - Free Report)
This fund tracks the MSCI USA Select Value Momentum Blend Index, offering exposure to large and mid-cap companies with higher exposure to value and momentum factors, while maintaining a moderate turnover and lower realized volatility compared with the traditional capitalization weighted indices. It accumulated $453.8 million in AUM and charges 0.20% in expense ratio.
With AUM of $291.8 million, this product targets large-cap securities with a combination of core factors (high value, high quality and low size characteristics) and a focus factor comprising high momentum characteristics. It follows the Russell 1000 Momentum Focused Factor Index and charges an annual fee of 20 bps.
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New Momentum ETF (QQQA) Hits the Market
Expanding it suite of ETF products, ProShares recently launched the ProShares Nasdaq-100 Dorsey Wright Momentum ETF (QQQA). The timing of the launch can turn out to be beneficial for the firm given the optimism surrounding the U.S. economic recovery from the pandemic-led slump.
QQQA in a Nutshell
ProShares Nasdaq-100 Dorsey Wright Momentum ETF seeks investment results, before fees and expenses, which track the performance of the Nasdaq-100 Dorsey Wright Momentum Index. Notably, QQQA is the first ETF focusing on select Nasdaq-100 stocks identified as having the greatest potential to outperform. It is also worth noting here that Dorsey Wright, which is a reputed leader in momentum investing, picks the 21 leading Nasdaq-100 stocks based on a proprietary “Relative Strength” signal.
The fund charges an expense ratio of 58 basis points. Technology (55.5%), Consumer Discretionary (18.7%) and Consumer Staples (10.6%) are the top three sectors with the highest weighting within the fund.
What Makes QQQA an Attractive Pick?
Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months. They have the potential to beat broader market returns in the coming months if the market optimism prevails.
The U.S. economy seems to be strongly rebounding from the coronavirus led-slowdown. Several factors like reopening of the economy, accelerated coronavirus vaccine rollout and solid fiscal support are raising consumer optimism.
Further, the release of strong economic data is instilling optimism. The latest update on U.S. manufacturing output looks impressive as the plants that were impacted by February's severe weather conditions in the south-central region became operational in April. Per the Fed’s recently-released data, total industrial production rose 0.7% in April. Going on, there was a 0.4%, 0.7% and 2.6% rise, respectively, in manufacturing output, mining and utilities production. Total industrial production rose 16.5% year over year in April.
Additionally, the Fed’s continued dovish stance is increasing chances of speedy U.S. economic growth recovery from the coronavirus-induced sluggishness. The central bank decided to maintain rates at near-zero level until 2023 at least. Moreover, the central bank raised its economic growth outlook considering the vaccine and stimulus optimism and it also expects higher inflation this year.
ETF Competition
The fund faces tough competition owing to availability of a wide variety of options for momentum investing. Below we discuss a few ETFs that seek to provide exposure to momentum ETFs:
iShares MSCI USA Momentum Factor ETF (MTUM - Free Report)
This fund provides exposure to large and mid-cap stocks that exhibit relatively higher price momentum by tracking the MSCI USA Momentum SR Variant Index. It charges 15 basis points (bps) in fees per year and is a popular choice, with AUM of $13.90 billion (read: ETF Areas That Investors Can Consider for May).
Invesco DWA Momentum ETF (PDP - Free Report)
This fund tracks the Dorsey Wright Technical Leaders Index, which measures the performance of companies that demonstrate powerful relative strength characteristics. It has amassed $1.72 billion in its asset base and charges 62 bps in annual fees (read: Top 3 Reasons Why You Should Bet on Momentum ETFs Now).
Invesco S&P MidCap Momentum ETF (XMMO - Free Report)
This ETF follows the S&P Midcap 400 Momentum Index, which is designed to identify mid-cap firms with the highest momentum scores. XMMO has AUM of $915 million and an expense ratio of 0.34%.
VictoryShares USAA MSCI USA Value Momentum ETF (ULVM - Free Report)
This fund tracks the MSCI USA Select Value Momentum Blend Index, offering exposure to large and mid-cap companies with higher exposure to value and momentum factors, while maintaining a moderate turnover and lower realized volatility compared with the traditional capitalization weighted indices. It accumulated $453.8 million in AUM and charges 0.20% in expense ratio.
SPDR Russell 1000 Momentum Focus ETF (ONEO - Free Report)
With AUM of $291.8 million, this product targets large-cap securities with a combination of core factors (high value, high quality and low size characteristics) and a focus factor comprising high momentum characteristics. It follows the Russell 1000 Momentum Focused Factor Index and charges an annual fee of 20 bps.
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 >>