DWAS VS MTUM
In the realm of finance, ETFs (Exchange-Traded Funds) have taken center stage, offering investors diverse opportunities to tap into niche markets. Two of the ETFs that have garnered attention in recent times are DWAS and MTUM. Both are renowned for their unique investment strategies and potential to deliver returns. However, how do they fare when compared side by side? This article seeks to provide a detailed comparison of the two.
DWAS VS MTUM: Sectors and Top Holdings
A closer look at the sectors and top holdings of each ETF can provide insights into their investment philosophies. DWAS, also known as the Invesco DWA SmallCap Momentum ETF, primarily focuses on small-cap companies that show promising momentum characteristics. These are firms that, although smaller in capitalization, display strong performance trends. Some of its top holdings often belong to the tech, healthcare, and consumer discretionary sectors.
MTUM, on the other hand, is the iShares MSCI USA Momentum Factor ETF. As the name suggests, it targets large and mid-cap companies in the U.S. that demonstrate high momentum characteristics. Its top holdings predominantly come from the tech sector, with major names like Apple and Microsoft frequently making the list. It also has substantial exposure to healthcare and consumer sectors but is more diversified in its approach than DWAS.
DWAS overlap DWAS VS MTUM
DWAS VS MTUM: Capitalization Strategy
When it comes to the capitalization strategy, the difference between DWAS and MTUM is evident. DWAS, as previously mentioned, has its sights set on the small-cap arena. Investing in small-cap companies can be inherently riskier, given their volatile nature. However, the potential for higher returns makes DWAS an attractive option for those willing to embrace that volatility.
MTUM, conversely, is more conservative. Its focus on large and mid-cap companies ensures that the portfolio consists of established businesses with proven track records. While this may lead to steadier returns, it might also result in missing out on the exponential growth potential of emerging small-cap players.
DWAS VS MTUM: Tracking and Exposure
Both DWAS and MTUM employ momentum-based strategies, but the nuances lie in their exposure and tracking methods. DWAS uses the Dorsey Wright® SmallCap Technical LeadersTM Index as its benchmark. It selects around 200 U.S. small-capitalization companies based on Dorsey Wright’s proprietary selection methodology, which emphasizes price momentum.
MTUM, however, tracks the MSCI USA Momentum Index. This index selects stocks from the parent MSCI USA Index (which covers large and mid-cap segments) based on both 6 and 12-month price performances. The approach ensures that the ETF captures momentum in a broader universe of stocks, making it more diversified in its momentum picks.
Conclusion
The decision to choose between DWAS and MTUM boils down to individual investment goals and risk appetite. For investors seeking the thrill of small-cap exposure with its inherent risks and rewards, DWAS might be the go-to. It offers the potential for high returns, especially during bullish market conditions where small-caps tend to outperform.
MTUM, meanwhile, provides a more balanced approach to momentum investing. By targeting large and mid-cap companies, it gives exposure to established players, possibly ensuring steadier returns during volatile times.
It's crucial to remember that past performance is not indicative of future results. Both ETFs have their merits, and a well-diversified portfolio might even consider having allocations to both. Whichever you lean towards, understanding the intricacies of DWAS VS MTUM will ensure a more informed investment decision.
Sources:
- Invesco. (2021). Invesco DWA SmallCap Momentum ETF Overview.
- iShares by BlackRock. (2021). iShares MSCI USA Momentum Factor ETF Overview.
- Dorsey Wright. (2021). SmallCap Technical Leaders Index Methodology.
- MSCI. (2021). MSCI USA Momentum Index Overview.
DWAS ETF issuer
DWAS ETF official page