JPMorgan US Momentum Factor ETF

JMOM

Market cap $1.83B

JMOM provides diversified, sector-balanced momentum exposure, avoiding heavy concentration in mega caps and individual stocks, which helps control volatility. The fund trades at a slight premium to the market but is cheaper than most momentum ETF peers, with competitive risk-adjusted returns and low expenses. Performance has closely tracked the Russell 1000, offering consistent returns and moderate volatility, making it a stable choice among momentum ETFs.

Jay Jacobs, BlackRock head of U.S. equity ETFs, joins CNBC's Dom Chu on ‘ETF Edge' to debate the momentum trade and if it is insulated from the tariff and economic uncertainty. Nate Geraci, ETF Store president, also joins the convo.

Momentum investing is likely to be a winning strategy for those seeking higher returns in a short spell.

JMOM's momentum-factor strategy targets U.S. large-cap and mid-cap stocks, matching Russell 1000's sector weights to reduce concentration risk and adapt to market changes. The fund's higher exposure to mid-cap and small-cap stocks increases volatility and downside risk, making it suitable for tactical plays in sustained bull markets. JMOM outperforms in the second stage of bull markets, as it reallocates towards stocks that performed well initially, but underperforms during market corrections.

JMOM is rated as a hold due to mixed factors, including strong past performance but high valuations and risks for top holdings. JMOM focuses on large-cap U.S. equities with positive price trends, using a rules-based approach, and has a low expense ratio of 0.12%. Risks for top holdings like Broadcom and Apple, and the potential for small caps to outperform large caps in 2025 are key consideration factors.

JPMorgan U.S. Momentum Factor ETF selects Russell 1000 stocks based on 12-month risk-adjusted returns. The JMOM ETF is well-diversified across holdings, and has a sector breakdown close to its parent index, overweight in technology. JMOM is also close to the Russell 1000 in valuation, a good point for a momentum fund, and in performance, which is disappointing.

Finally, someone believes the trend in the S&P 500 is their friend. In mid-August, the Invesco S&P 500 Momentum ETF (SPMO) had its 2024 net inflows nearly double.

JPMorgan U.S. Momentum Factor ETF is a robustly performing equities ETF that follows a momentum strategy. Momentum investing aims to capitalize on existing market trends by buying rising securities and selling them when they peak. The JPMorgan US Momentum Factor Index, which JMOM mirrors, has outperformed the SPY and another popular momentum ETF, MTUM, historically when financial conditions are easing.

The rally has been broad-based this year, with momentum investing emerging as a big winner.