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Momentum Continues To Lead US Equity Factor Strategies

Summary:
A bull market prevails across all the major US factor strategies led by momentum, based on one-year returns via a set of proxy ETFs. The iShares Edge MSCI USA Momentum Factor (MTUM) ticked up to a record high at yesterday’s close (Oct. 10). The upside bias for the fund has been unusually strong recently. The latest daily advance marks the tenth gain in the last eleven trading sessions, lifting the ETF to an impressive 28.6% one-year gain through Tuesday. The laggard (in relative terms) among the major factor groups in the US equity space for one-year results: low-volatility. iShares Edge MSCI Minimum Volatility USA (USMV) is up 15.9% vs. the year-earlier price. That’s a solid performance, although it trails the broad market’s 20.2% one-year advance via SPDR S&P 500 (SPY) and the rest

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A bull market prevails across all the major US factor strategies led by momentum, based on one-year returns via a set of proxy ETFs.

The iShares Edge MSCI USA Momentum Factor (MTUM) ticked up to a record high at yesterday’s close (Oct. 10). The upside bias for the fund has been unusually strong recently. The latest daily advance marks the tenth gain in the last eleven trading sessions, lifting the ETF to an impressive 28.6% one-year gain through Tuesday.

The laggard (in relative terms) among the major factor groups in the US equity space for one-year results: low-volatility. iShares Edge MSCI Minimum Volatility USA (USMV) is up 15.9% vs. the year-earlier price. That’s a solid performance, although it trails the broad market’s 20.2% one-year advance via SPDR S&P 500 (SPY) and the rest of the factor-ETF field.

Momentum Continues To Lead US Equity Factor Strategies

MTUM’s strong performance relative to the broad factor-ETF space has been conspicuous for months, inspiring some analysts to wonder how long the party will last. But so far, there’s no sign of trouble. Last month, Tom Lauricella at Morningstar noted that momentum “has been by far and away the most significant factor explaining performance” for US equity investors in 2017. No less is true a month later.

Momentum Continues To Lead US Equity Factor Strategies

For additional research on the factor ETFs cited above, here are links to the summary pages at Morningstar.com:

iShares Edge MSCI Min Vol USA (USMV) – low-volatility
Vanguard High Dividend Yield ETF (VYM) – high-dividend yields
iShares Edge MSCI USA Quality Factor (QUAL) – so-called quality stocks
iShares Edge MSCI USA Momentum Factor (MTUM) – price momentum
iShares S&P Small-Cap 600 Value (IJS) – small-cap value stocks
iShares S&P Mid-Cap 400 Value (IJJ) – mid-cap value stocks
iShares S&P 500 Value (IVE) – large-cap value stocks
iShares Core S&P Small-Cap – small-cap core

James Picerno

James Picerno is a financial journalist who has been writing about finance and investment theory for more than twenty years. He writes for trade magazines read by financial professionals and financial advisers. Over the years, he’s written for the Wall Street Journal, Barron’s, Bloomberg Markets, Mutual Funds, Modern Maturity, Investment Advisor, Reuters, and his popular finance blog, The CapitalSpectator.

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