MTUM: Capturing U.S. Momentum

Summary

• The iShares MSCI USA Momentum Factor ETF offers diversified exposure to US large- and mid-cap stocks with strong risk-adjusted momentum, but carries higher volatility.
• The ETF's high P/E ratio (33x) signals elevated valuations, especially in tech and financials, increasing the risk of sharp corrections if growth expectations falter.
• Recent performance has lagged peers using pure momentum metrics, partly due to risk-adjusted selection and portfolio turnover limits, despite similar expense ratios.
• I recommend holding MTUM or taking profits if risk-averse; avoid new entries until a correction brings P/E ratios closer to 25x, as current valuations are stretched.

Torsten Asmus

Introduction

In today's article, we will analyse the iShares MSCI USA Momentum Factor ETF (BATS:MTUM) investment vehicle, which operates under the umbrella of the world-renowned fund manager BlackRock. This investment vehicle seeks to replicate the performance of the MSCI

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.