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Here's Why You Can Consider Momentum ETFs as Market Recovers
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Wall Street recovered from bouts of weekly losses as the major market indices had ended the previous week in the green. The S&P 500 and Nasdaq composite indices rose 6.5% and 6.8%, respectively, in the week ending May 27 and finally halted their seven-week losing momentum. Riding the tide, the Dow Jones Industrial Average was also up 6.2% for the same period and ended its longest losing streak of eight straight weeks.
There are certain factors that can be credited for the weekly rally in the market. The latest reading on inflation level reflects that the rise in the metric might be slowing down, which is a positive. The core personal consumption expenditures price index increased 4.9% in April, declining from the 5.2% rise last month, per a CNBC article. Notably, the metric is tracked by the central bank when formulating its monetary policy.
Encouraging retail earnings are indicating strength in consumer spending. Ulta Beauty shares increased 12.5% on May 27 on posting better-than-expected quarterly results. Macy’s (M) shares were up 19.3% on May 26 owing to the lifted guidance for 2022 profit levels. Dollar Tree (DLTR) also rose 21.9% on earnings beat on the same day.
Moreover, the recently released Fed minutes from the May 3-4 meeting spread some bullishness among the market participants as there was no element of surprise. The minutes highlighted that the central bank officials are ready to move ahead with several 50-basis point interest rate hikes to control the red-hot inflation readings.
Adding to the upbeat scenario is the decline in the initial jobless claims for the week ended May 21. The same came in at 210,000, declining from the previous week’s reading of 218,000, according to a CNBC article.
Also, certain U.S. economic data releases have been encouraging so far. The Department of Commerce reported that retail sales in April were up 0.9% month over month, below the consensus estimate of 1%. Year over year, retail sales grew 8.2% in April. The Federal Reserve reported that industrial production increased 1.1% last month, well above the consensus estimate of 0.5%.
Momentum ETFs Worth Your Attention
Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months. Here we present five ETFs that could outperform on the current market optimism. Further, these could beat broader market returns in the coming months if the optimism prevails.
iShares MSCI USA Momentum Factor ETF provides exposure to large and mid-cap stocks that exhibit a relatively higher price momentum by tracking the MSCI USA Momentum SR Variant Index.
iShares MSCI USA Momentum Factor ETF charges 15 basis points (bps) in fees per year and is a popular choice, with an AUM of $10.23 billion.
Invesco DWA Momentum ETF tracks the Dorsey Wright Technical Leaders Index, which measures the performance of companies that demonstrate powerful relative strength characteristics.
Invesco DWA Momentum ETF amassed $1.21 billion in its asset base and charges 62 bps of annual fees.
Invesco S&P MidCap Momentum ETF follows the S&P Midcap 400 Momentum Index, designed to identify mid-cap firms with the highest momentum scores.
XMMO has an AUM of $885.7 million and an expense ratio of 0.33%.
VictoryShares USAA MSCI USA Value Momentum ETF (ULVM - Free Report)
VictoryShares USAA MSCI USA Value Momentum ETF 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 than traditional capitalization-weighted indices.
VictoryShares USAA MSCI USA Value Momentum ETF accumulated $290.4 million in AUM and charges 0.20% in expense ratio.
With an AUM of $292.8 million, SPDR Russell 1000 Momentum Focus ETF 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.
SPDR Russell 1000 Momentum Focus ETF follows the Russell 1000 Momentum Focused Factor Index and charges an annual fee of 20 bps.
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Here's Why You Can Consider Momentum ETFs as Market Recovers
Wall Street recovered from bouts of weekly losses as the major market indices had ended the previous week in the green. The S&P 500 and Nasdaq composite indices rose 6.5% and 6.8%, respectively, in the week ending May 27 and finally halted their seven-week losing momentum. Riding the tide, the Dow Jones Industrial Average was also up 6.2% for the same period and ended its longest losing streak of eight straight weeks.
There are certain factors that can be credited for the weekly rally in the market. The latest reading on inflation level reflects that the rise in the metric might be slowing down, which is a positive. The core personal consumption expenditures price index increased 4.9% in April, declining from the 5.2% rise last month, per a CNBC article. Notably, the metric is tracked by the central bank when formulating its monetary policy.
Encouraging retail earnings are indicating strength in consumer spending. Ulta Beauty shares increased 12.5% on May 27 on posting better-than-expected quarterly results. Macy’s (M) shares were up 19.3% on May 26 owing to the lifted guidance for 2022 profit levels. Dollar Tree (DLTR) also rose 21.9% on earnings beat on the same day.
Moreover, the recently released Fed minutes from the May 3-4 meeting spread some bullishness among the market participants as there was no element of surprise. The minutes highlighted that the central bank officials are ready to move ahead with several 50-basis point interest rate hikes to control the red-hot inflation readings.
Adding to the upbeat scenario is the decline in the initial jobless claims for the week ended May 21. The same came in at 210,000, declining from the previous week’s reading of 218,000, according to a CNBC article.
Also, certain U.S. economic data releases have been encouraging so far. The Department of Commerce reported that retail sales in April were up 0.9% month over month, below the consensus estimate of 1%. Year over year, retail sales grew 8.2% in April. The Federal Reserve reported that industrial production increased 1.1% last month, well above the consensus estimate of 0.5%.
Momentum ETFs Worth Your Attention
Momentum investing looks to fetch profits from hot stocks that have shown an uptrend over the past few weeks or months. Here we present five ETFs that could outperform on the current market optimism. Further, these could beat broader market returns in the coming months if the optimism prevails.
iShares MSCI USA Momentum Factor ETF (MTUM - Free Report)
iShares MSCI USA Momentum Factor ETF provides exposure to large and mid-cap stocks that exhibit a relatively higher price momentum by tracking the MSCI USA Momentum SR Variant Index.
iShares MSCI USA Momentum Factor ETF charges 15 basis points (bps) in fees per year and is a popular choice, with an AUM of $10.23 billion.
Invesco DWA Momentum ETF (PDP - Free Report)
Invesco DWA Momentum ETF tracks the Dorsey Wright Technical Leaders Index, which measures the performance of companies that demonstrate powerful relative strength characteristics.
Invesco DWA Momentum ETF amassed $1.21 billion in its asset base and charges 62 bps of annual fees.
Invesco S&P MidCap Momentum ETF (XMMO - Free Report)
Invesco S&P MidCap Momentum ETF follows the S&P Midcap 400 Momentum Index, designed to identify mid-cap firms with the highest momentum scores.
XMMO has an AUM of $885.7 million and an expense ratio of 0.33%.
VictoryShares USAA MSCI USA Value Momentum ETF (ULVM - Free Report)
VictoryShares USAA MSCI USA Value Momentum ETF 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 than traditional capitalization-weighted indices.
VictoryShares USAA MSCI USA Value Momentum ETF accumulated $290.4 million in AUM and charges 0.20% in expense ratio.
SPDR Russell 1000 Momentum Focus ETF (ONEO - Free Report)
With an AUM of $292.8 million, SPDR Russell 1000 Momentum Focus ETF 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.
SPDR Russell 1000 Momentum Focus ETF follows the Russell 1000 Momentum Focused Factor Index and charges an annual fee of 20 bps.