Invesco S&P 500 Momentum ETF

SPMO

Market cap $12.9B

On this episode of the “ETF of the Week” podcast, VettaFi's Head of Research, Todd Rosenbluth, discussed the Invesco S&P MidCap Momentum ETF (XMMO) with Chuck Jaffe of Money Life. The pair discussed several topics related to the fund to give investors a deeper understanding of the ETF.

The final trades of the day with CNBC's Melissa Lee and the Fast Money traders.

The AI boom has been a driving force for the tech-heavy indices, and while a correction could have the potential to be more painful for the growth- and AI innovation-heavy Invesco QQQ Trust (NASDAQ:QQQ) and other similar ETFs out there, longer-term investors who can weather a storm without breaking a sweat might be in for greater rewards over the long run.

Invesco S&P 500 Momentum ETF offers strong long-term growth potential, with a focus on high-momentum U.S. equities, especially technology. SPMO's semi-annual rebalancing recently increased tech exposure and removed underperformers, positioning the fund to benefit from AI and lower interest rates. The ETF has outperformed key peers over the past year, boasts a 5-year CAGR of 18.53%, but carries valuation risk with a P/E of 31.51x.

The Invesco S&P 500 Momentum ETF is reiterated as a strong buy for its proven momentum-based strategy and consistent outperformance. SPMO's recent rebalancing increased technology exposure and reduced underperforming consumer defensive holdings, enhancing its sector allocation for current market conditions. SPMO delivered a 35.57% return over the past year, nearly doubling the S&P 500's 18.21%, showcasing its effectiveness in volatile markets.

Invesco S&P 500® Momentum ETF (SPMO) underwent a major September rebalancing, with significant changes to its top holdings. SPMO's methodology focuses strictly on momentum factors, ignoring valuations, and has delivered strong outperformance with less tech concentration than SPY or QQQ. Recent rebalancing saw additions like ORCL, V, CSCO, and CRWD, while AMZN, TSLA, COST, BAC, and AXP were removed.

Invesco S&P 500® Momentum ETF's Index reconstituted on Friday, substituting 40 securities and 34% of the portfolio by weight. Key changes involved Oracle, Visa, Amazon, Tesla, and Costco Wholesale. Tech sector exposure increased to 34%, while Consumer Discretionary exposure fell by 11%. Overall, SPMO is now less diversified than before at the sector level. However, overlap with this benchmark remains low at 32%, and SPMO still has many other great things going for it, including robust quality and surprisingly excellent GARP statistics.

Beating the S&P 500 is what every investor aims to do, and doing so for a long time is a coveted achievement.

Many analysts are making bullish calls on the S&P 500 target due to earnings, AI and U.S. growth. This has put the focus on VOO, IVV, SPY and SPMO.

AI momentum, strong earnings, resilient U.S. economy, and likely Fed rate cuts could keep fueling the S&P 500 rally, benefiting ETFs like VOO, SPY and IVV.