SPMO: Can This Top-Performing Momentum ETF Keep Up The Pace?

Summary

• SPMO has easily been the top-performing large-cap momentum ETF over the last three years. Key benefits are a straightforward approach and a low 0.13% expense ratio.
• Its Index selects the top 100 S&P 500 stocks based on one-year price returns, and its weighting scheme gives preference to larger and likely more profitable stocks, thereby boosting quality.
• SPMO also currently has excellent exposure to the growth factor, though that's far from guaranteed. Certain top contributors like Nvidia, Amazon, and Meta Platforms might be deleted in September.
• If that happens, likely replacements would be lower-growth stocks like Visa and Mastercard, and it would dramatically change the ETF from a fundamentals' perspective.
• While there's no need to panic, I did want to highlight some alternatives in case SPMO's growth factor exposure disappears. They include MTUM, JMOM, and the most compelling choice in my view, SEIM.

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Investment Thesis

With a 119.52% total return, the Invesco S&P 500 Momentum ETF (NYSEARCA:SPMO) has been the top-performing large-cap momentum fund over the last three years. Its straightforward selection process, impressive $9.61 in net assets, low 0.13% expense

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SPY, V either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.