Momentum remains the factor to beat
MTUM•The iShares Momentum ETF gained 5.6% in September and is up 29.1% year to date, more than double the SPDR S&P 500 ETF’s 13.6% advance. Low-volatility stocks are down 0.5% this year.
1. Momentum leads year to date
Momentum was the strongest-performing factor as the fourth quarter began. The iShares Momentum ETF is up 29.1% this year, while growth has gained 17.8% and small caps 15.1%.
2. Defensive strategies lag
Quality has risen 13.7%, narrowly ahead of the SPDR S&P 500 ETF’s 13.6% gain. Value is up 8.7% and dividend-focused stocks 4.9%, while low volatility is down 0.5%. In September, low-volatility stocks fell 5.6%, dividend-focused shares lost 6.5% and small caps declined 5.5%.
3. Leadership could change
The article says geopolitical tensions, elevated oil prices, a 10-year Treasury yield near its highest level in almost 25 years, persistent inflation concerns and approaching midterm elections could challenge momentum’s dominance. It says defensive factors may regain favor if investors become more risk-averse.
