Invesco S&P 500® Momentum ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy merits an Average Process Pillar rating.  Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

NVIDIA

Microsoft

Apple

Amazon

Eli Lilly

Broadcom

Berkshire Hathaway Inc. - Ordinary Shares - Class B

JPMorgan Chase & Co

Costco

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Invesco S&P 500® Momentum ETF earns an Average Process Pillar rating. 

The main contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Excellent risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category average, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 42%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

 This strategy leans toward smaller, more undervalued companies compared with its average peer in the Large Growth Morningstar Category. Analyzing additional factors, this strategy has continually had exposure to high-momentum stocks compared with Morningstar Category peers in the last few years. Momentum strategies wager that market outperformers will continue to outperform, and laggards will continue to lag. Higher exposure to the former could mean the managers are overweighting stocks on winning streaks. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy's portfolio also has had exposure to more stocks with high dividend or buyback yields over peers in these years. Higher-yield stocks can provide dependable income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. In the most recent month, however, the fund's Yield exposure was in line with the Morningstar Category average. In addition, this strategy has not maintained a defensive tilt, demonstrated by low exposure to the quality factor. This means the fund avoids holding firms that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to surpass peers during economic booms. In recent months, the strategy also had less Quality factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in industrials and healthcare relative to the category average by 9.9 and 4.6 percentage points, respectively. The sectors with low exposure compared to category peers are technology and consumer cyclical, underweight the average by 14.7 and 6.9 percentage points of assets, respectively. The portfolio is composed of 101 holdings and is similarly diversified as peers, with 55.9% of portfolio assets concentrated within the top 10 holdings. And finally, in terms of portfolio turnover, looking at year-over-year movements, 81% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Invesco S&P 500® Momentum ETF benefits considerably from its team, earning it an Above Average People Pillar rating. There are four managers listed on the fund: Michael Jeanette, Peter Hubbard, Tony Seisser, Pratik Doshi. The team is well equipped, with an average of 12 years of portfolio management experience. Together, they manage a total of 144 strategies, with a Bronze asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate. This group has had relatively low management turnover, providing a stable environment and continuity for the strategies. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

Invesco succeeds in a number of areas but also has its share of subpar offerings, along with many others that land somewhere in the middle. A mid-2023 change of CEO, from longtime chief Marty Flanagan to veteran Invesco executive Andrew Schlossberg, is noteworthy, and several other executives retired or departed in 2023. Portfolio-manager shuffles aimed at bolstering poor performers, which began under Flanagan, have continued under Schlossberg, who told Morningstar his most important aim is bolstering “investment quality.” However, major changes of direction or approach are unlikely. The firm retains a Morningstar Parent rating of Average. 
Invesco’s international-equity teams in Texas and New York remain solid. However, the extensive U.S.-equity lineup needs improvement. Fixed-income offerings run the gamut: The multisector and short-term-bond areas are good, but corporate high-yield is less impressive. The firm’s exchange-traded fund lineup includes the popular Nasdaq-focused QQQ; passive strategies make up around 37% of Invesco’s assets under management. Invesco has not been averse to trying new types of strategies, and it was among the firms that immediately launched a spot bitcoin ETF after SEC approval in early 2024.
The picture outside the United States is mixed. Fund performance has been subpar in Asia, and while the picture has brightened in the United Kingdom and Europe, that region still can’t be considered a strength.

Parent

Invesco S&P 500 Momentum ETF

SPMO tracks an index of 100 S&P 500 components with the strongest volatility-adjusted momentum.

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Invesco S&P 500 Momentum ETF is one of the best-performing unleveraged funds over the last 3 months. SPMO's strategy of selecting and weighing stocks based on momentum has contributed to its recent rally. The fund is heavily concentrated in its top 10 holdings, with Meta and Nvidia being major contributors to its performance.

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For investors seeking momentum, Invesco S&P 500 Momentum ETF SPMO is probably on the radar. The fund just hit a 52-week high and is up about 37% from its 52-week low price of $51.67/share.

Momentum ETF (SPMO) Hits New 52-Week High

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Invesco S&P 500® Momentum ETF is invested in 100 stocks of the S&P 500 index with higher volatility-adjusted return. The SPMO ETF is less concentrated in technology but more concentrated in the top 10 holdings compared to the S&P 500. Valuation and growth metrics are not much different from the parent index, but quality is significantly superior.

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Markets kicked off the week gaining on the momentum of last week's strong performance. One stock in particular saw some major gains.

Invest in the Market's Momentum – and NVIDIA's – With SPMO

Momentum was the only S&P 500 factor index to generate positive returns during the third quarter. The S&P 500 Momentum gained 2.8% during Q3, while the parent S&P 500 lost 3.3% in the quarter.

Momentum Leads Q3 Factor ETF Performance

Invesco S&P 500 Momentum ETF invests in momentum stocks with high volatility and a turnover ratio of 124%. The fund has generated strong total returns over the long run, despite a low yield of 1-2%. The fund is heavily invested in the information & communication technology, industrial, and healthcare sectors, with a bias towards certain industries.

SPMO: Low-Yielding S&P-Based Momentum ETF Better Than The Broader Market

The Invesco S&P 500® Momentum ETF's methodology, combined with our alpha plot, suggests the vehicle might suffer from crash risk at some stage. Although the SPMO ETF has presented solid returns since its inception, we urge investors to avoid being trapped into a recency bias as the ETF's weighting methodology is risky. A regression analysis shows that the ETF tends to suffer from tail risk.

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Compared to its U.S. equity factor peers, momentum is looking very compelling this month. The S&P 500 Momentum is up 1.6% in September, while the benchmark has lost 1.1% during the month.

Momentum Factor Continues Outperformance into September

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As U.S. equities struggled last month, just two S&P 500 factor indexes posted position returns in August. The S&P 500 declined 1.6% in August, marking its second monthly decline year to date.

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Invesco S&P 500 Equal Weight ETF

Long-term investors can pair smart beta ETFs to better capture returns over different points in the market cycle. Many advisors use the Invesco S&P 500® Equal Weight ETF (RSP) as a core equity holding in a portfolio.

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Among the various investment factors, it's not a stretch to say that growth, size, and value, among others, are easily understood while others, like momentum, are in the misunderstood camp.

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Momentum is the simple idea that stocks which performed relatively strong over the recent past (winners) tend to outperform those that performed poorly (losers). The Invesco S&P 500 Momentum ETF invests in the 100 stocks with the highest “momentum score” (12-month return) from the S&P 500 Index.

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The Invesco S&P 500 Momentum ETF invests based on the S&P 500 Momentum Index. It only holds about 20% of the full S&P 500 Index. The SPDR S&P 500 ETF invests in all 500+ stocks of the S&P 500 Index; an Index which is widely followed and reported by tv and internet sites.

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Advisors can pair factor-based strategies to optimize a client portfolio. Many factor-based strategies have significantly outperformed the S&P 500 this year, with the small-size factor being one of the lead drivers of outperformance.

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Investors have been rotating into low volatility, value funds all year, possibly leaving their portfolios underexposed to the momentum factor. Momentum is the tendency for stocks that have performed well in the recent past to continue to perform well in the future – at least near term.

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The Invesco S&P 500® Equal Weight ETF (RSP) can be paired with factor ETFs to complement the fund's tilt toward size and value.  Particularly as markets are anticipating an increase in volatility ahead, investors may want to enhance their core equity holdings.

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With fresh new highs the past week, momentum is clearly on the side of the S&P 500, and funds focused on the index can build off the strength with Berkshire Hathaway's recent operating profit numbers. Run by CEO and famed investor Warren Buffett, the holdings company saw its operating profit and cash increase despite an [.

A Momentum ETF to Consider as Berkshire Earnings Rise

A variety of factors have received plenty of attention at various points over the course of 2021, but investors looking for a factor idea to close out the year and ride into 2022 may want to consider momentum. Enter the Invesco S&P 500 Momentum ETF (SPMO), which follows the S&P 500 Momentum Index.

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