What is the IMOM ETF ?
IMOM ETF : Overview
The IMOM ETF, short for "International MOMentum," is a financial instrument actively managed by Empowered Funds, LLC dba EA Advisers. The investment strategy for this ETF is based on a quantitative, rules-based methodology, which focuses on identifying a portfolio of approximately 50 to 100 non-U.S. equity securities with the highest relative momentum. Momentum investing emphasizes investing in securities that have recently demonstrated higher total return performance compared to others.
IMOM ETF Underlying and Exposure: What does it track and how?
The ETF's underlying investment strategy revolves around analyzing an initial universe of liquid stocks primarily traded on developed non-U.S. markets. These markets are represented by countries included in the MSCI EAFE Index. To be considered for inclusion, the smallest-capitalization stocks in the initial universe must have a market capitalization above $1 billion.
The Adviser then filters out illiquid securities, real estate investment trusts, exchange-traded funds (ETFs), American Depositary Receipts, and companies with less than twelve months of available financial data. The resulting universe is composed primarily of highly liquid, small-, mid-, and large-cap stocks.
Further screens are applied to identify companies that may negatively impact momentum, such as those with poor past six-month and nine-month momentum, and those with high beta values. Next, the ETF selects the companies with the highest cumulative return for the past 12 months, excluding the most recent month. An ensemble of momentum quality screens is then applied to identify companies with the most consistent positive returns during the measured 12-month period. Ultimately, the ETF invests in the top 50 to 100 momentum stocks from this process.
IMOM overlap What is the IMOM ETF ?
IMOM ETF : Benefits to Invest in this ETF
Investing in the IMOM ETF offers several potential benefits. Firstly, it provides exposure to a diversified portfolio of non-U.S. equity securities, allowing investors to access international markets and potentially benefit from global economic growth. Secondly, the ETF's focus on momentum investing can potentially capitalize on market trends and take advantage of securities that have demonstrated strong recent performance. Additionally, the periodic reallocation of the portfolio ensures that it stays in line with the momentum-based investment strategy.
IMOM ETF : Considerations Before Investing
While the IMOM ETF presents appealing aspects, investors must be aware of certain considerations before making investment decisions. As an actively managed fund, it comes with management fees, which may affect overall returns. Additionally, momentum investing can be inherently volatile, as it depends on short-term performance trends. Investors should carefully assess their risk tolerance and investment goals before allocating funds to this ETF.
Conclusion:
The IMOM ETF, managed by Empowered Funds, LLC dba EA Advisers, follows a robust investment strategy based on momentum investing. By selecting non-U.S. equity securities with the highest relative momentum, the ETF aims to provide investors with exposure to potentially lucrative international markets. However, investors should weigh the benefits against the inherent risks and consider their investment objectives and risk tolerance before adding this ETF to their portfolio.
Disclaimer: This article does not provide any investment advisory services.
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FAQ
What is the IMOM ETF?
The IMOM ETF, also known as the iShares MSCI Momentum Factor ETF, is an exchange-traded fund that aims to provide investors with exposure to stocks that exhibit strong momentum characteristics.
What is the underlying index that the IMOM ETF aims to track?
The IMOM ETF seeks to track the performance of the MSCI USA Momentum Index, which includes large and mid-cap U.S. stocks that have demonstrated positive momentum signals.
How does the IMOM ETF select its holdings?
The IMOM ETF selects its holdings based on a momentum strategy, which identifies stocks that have shown strong price appreciation and relative strength over recent periods. Stocks with positive price trends are included in the fund's portfolio.
What types of companies are typically included in the IMOM ETF?
The IMOM ETF includes companies from various sectors that have demonstrated strong momentum in their stock prices. These may include technology, consumer goods, healthcare, financials, and other sectors.
What are the potential benefits of investing in the IMOM ETF?
Investing in the IMOM ETF may offer the potential for higher returns by focusing on stocks with positive price momentum. It can provide diversification across different sectors while targeting companies that have shown recent market strength.