Invesco S&P 500 Momentum ETF

SPMO

Market cap $16.8B

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.

SPMO offers strong exposure to high-momentum S&P 500 companies, especially leaders in AI and cloud computing like Nvidia, Meta, and Amazon. The fund has significantly outperformed the S&P 500 and other momentum ETF peers over the past three years, validating its momentum-based strategy for long-term growth and effectiveness at management. SPMO's low yield and concentration on hypergrowth names make it less suitable for income-focused investors or those seeking short-term trades.

Most investors who buy the Vanguard S&P 500 ETF (NYSEARCA:VOO) assume they already own the market's sweet spot.

Relying on the backtest, SPMO generates alpha compared to the S&P 500 or other factor-based ETFs. The time-sensitive structure of SPMO mitigates the overcrowded risk, but hardly calms downturns, and fuels volatility. Personally, I deal with uncertainty with a multifactor approach, built first on quality, then on momentum.