FDMO - FDMO: Low-Cost Momentum ETF With Mixed Returns
2024-07-20 03:23:56 ET
Summary
- FDMO is supposed to offer exposure to U.S. stocks exhibiting strong momentum characteristics.
- The index it tracks has a nuanced approach to constituent selection, with returns, volatility, EPS surprises, and short interest among the parameters assessed.
- Most FDMO's holdings have high beta, accompanied by robust growth characteristics. At the same time, there is close to nothing to criticize about their quality.
- However, a Buy rating looks unjustified, as FDMO's performance since inception has been hardly convincing, with the main issue being its inability to best a few peers and the market.
Momentum investors make the bold assumption that if a stock price is trending higher, there is a reasonable degree of certainty that it should continue moving upwards unhindered in the near future. Though simplistic, this is an assumption that can definitely translate into solid returns, but only if it is treated cautiously and the strategy is applied timely. Here, the simplest and perhaps most convenient way is to stick with an ETF that has a strategy built around the concept of momentum instead of engaging in individual stock picking. And investors are not short of options to choose from. One of the vehicles that offers exposure to the said factor is the Fidelity Momentum Factor ETF ( FDMO ), which I would like to add to my coverage list today....
FDMO: Low-Cost Momentum ETF With Mixed Returns