While many investors tend to view equity portfolio allocations through either a style box or sector lens, an alternative approach is to view investments through an equity factor lens. Equity factors seek to identify the stocks of companies with certain quantifiable characteristics that have been shown to contribute meaningfully to returns over time. Factors can be organized into groups based upon their historical performance during different market environments. For example, typically offensive factors, such as value or smaller-sized companies, tend to exhibit characteristics that provide the potential for outperformance during periods of accelerating economic growth. Conversely, typically defensive factors, such as quality or low volatility, tend to exhibit characteristics that provide the potential for outperformance in more volatile markets.
One factor that may be well-positioned in today’s environment is Momentum. Momentum is a trend following factor, so is neither offensive or defensive, it tends to be agnostic to sector or style leadership, and instead seeks to capitalize on prevailing movements. Resilient economic growth, investor optimism, and forecasted accelerating corporate earnings may help sustain upward trends in high-performing stocks, which could provide a favorable backdrop for momentum investing. Momentum’s preferred environment tends to be one where strong trends develop in the market, providing the factor the opportunity to capitalize on the price persistence.
Our S&P suite of momentum-based ETFs attempts to target stocks with the greatest momentum scores. They identify the top quintile of companies from their parent universe that have exhibited the highest risk-adjusted return over the trailing 12-month measurement period. Given the momentum factor’s pervasiveness, we offer momentum-based ETFs across US capitalization ranges and geographies. SPMO is based on the S&P 500 Momentum Index; XMMO on the S&P Midcap 400 Momentum Index; XSMO on the S&P SmallCap 600 Momentum Index; IDMO on the S&P Developed ex-U.S. LargeMidCap Momentum Index; and EEMO on the S&P Momentum Emerging Plus LargeMidCap Index.
Get more information on our momentum-based ETFs below this video.
Important Information
The S&P 500 Momentum Index is designed to measure the performance of the top companies within the S&P 500 Index that exhibit the highest momentum. Momentum is typically defined as the rate of acceleration of a stock's price or the tendency of a stock to continue moving in its current direction. This index aims to capture the performance of stocks that have shown strong price momentum over a specified period.
The S&P MidCap 400 Momentum Index measures the performance of the top companies within the S&P MidCap 400 Index that exhibit the highest momentum. This index focuses on mid-sized companies that have demonstrated strong price momentum, providing investors with a way to gain exposure to mid-cap stocks that are experiencing significant upward price trends.
The S&P SmallCap 600 Momentum Index is designed to measure the performance of the top companies within the S&P SmallCap 600 Index that exhibit the highest momentum. This index targets small-cap companies that have shown strong price momentum, offering investors a way to invest in smaller companies that are on an upward price trajectory.
The S&P World Ex-U.S. Momentum Index measures the performance of the top companies outside of the United States that exhibit the highest momentum. This index includes companies from developed and emerging markets around the world, excluding the U.S., and focuses on those that have demonstrated strong price momentum. It provides investors with a way to gain exposure to international stocks that are experiencing significant upward price trends.
The S&P Momentum Emerging Plus LargeMidCap Index is designed to measure the performance of the top companies within the emerging markets that exhibit the highest momentum. This index focuses on large- and mid-cap companies from emerging market economies that have demonstrated strong price momentum.
Not a Deposit Not FDIC Insured Not Guaranteed by the Bank May Lose Value Not Insured by any Federal Government Agency
There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. The Fund’s return may not match the return of the Underlying Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.
Investments focused in a particular industry or sector, such as financials, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.
Momentum style of investing is subject to the risk that the securities may be more volatile than the market as a whole or returns on securities that have previously exhibited price momentum are less than returns on other styles of investing.
The Fund may become “non-diversified,” as defined under the Investment Company Act of 1940, as amended, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Index. Shareholder approval will not be sought when the Fund crosses from diversified to non-diversified status under such circumstances.
The fund may engage in frequent trading of its portfolio securities in connection with the rebalancing or adjustment of the Underlying Index.
Stocks of medium-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.
XSMO
Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.
IDMO
The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.
Investments focused in a particular industry, such as financial, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.
The performance of an investment concentrated in issuers of a certain region or country, such as the Japan and the European Union, is expected to be closely tied to conditions within that region and to be more volatile than more geographically diversified investments.
EEMO
The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.
The performance of an investment concentrated in issuers of a certain region or country, such as India and the Asia Pacific, is expected to be closely tied to conditions within that region and to be more volatile than more geographically diversified investments.
SPMO
Investments focused in a particular sector, such as health care and energy, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.
The Fund is non-diversified and may experience greater volatility than a more diversified investment.
Shares are not individually redeemable, and owners of the Shares may acquire those Shares from the Fund and tender those Shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 10,000, 20,000, 25,000, 50,000, 75,000, 80,000, 100,000, or 150,000 Shares.
Invesco Distributors, Inc. 3/25 NA4174271
