First Trust has launched the First Trust US Momentum UCITS ETF – FTMO – on the London Stock Exchange, expanding its UCITS ETF range.
The firm writes that FTMO is an ETF designed to provide investors with exposure to the 180 largest companies traded in US markets that exhibit the strongest price momentum.
FTMO aims to capitalise on the momentum factor while seeking to account for extremes. The ETF seeks to replicate the performance of the US Momentum iNDEX Index. The Index constituents are examined and rebalanced quarterly to ensure the portfolio remains aligned with the underlying momentum strategy.
First Trust writes that while FTMO primarily targets stocks with robust recent upward price trends, it also incorporates valuation checks to account for instances where prices may have risen too rapidly. This balanced approach seeks to harness the potential benefits of momentum investing while mitigating some of the risks associated with pure momentum strategies.
Key Features of FTMO:
• Smart Momentum: FTMO tracks the US Momentum iNDEX Index, focusing on the 180 largest US companies exhibiting the strongest price momentum.
• Built-in Risk Management: Unlike pure momentum strategies, FTMO incorporates valuation checks to guard against market exuberance, offering a more balanced approach.
• Regular Rebalancing: Quarterly reviews ensure the portfolio stays aligned with market trends and the underlying momentum strategy.
• Transparency and Efficiency: As an ETF, FTMO offers a liquid, cost-efficient solution for investors seeking exposure to momentum-driven US equities.
Gregg Guerin, Senior Product Specialist at First Trust Global Portfolios, says: “We are delighted to partner with iNDEX Research to offer investors a sophisticated tool to potentially benefit from market trends. By combining strong price momentum with valuation considerations, we’re proud to introduce a product that aims to capture upside potential while managing the risks typically associated with pure momentum strategies.”
Yaniv Kunis, founder and CEO of iNDEX Research, says: “We are excited to collaborate with an innovative ETF industry leader such as First Trust and expand our activities in the European market. The US Momentum iNDEX was designed to fully implement the Momentum Factor while maintaining extensive diversification and risk management constraints. These constraints, for instance, can prevent highly volatile and significantly overvalued shares from entering the index. Given the current state of the US stock market, this conservative approach is more important than ever.”
