Momentum rules the market this summer, but let the buyer beware

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Sticking with those Big Tech winners has been the ticket this year, but coasting on momentum can be a risky play.

The summer of market momentum continues. For passive investors, it's the best of times: They're seeing new highs on the two major cap-weighted indexes — S & P 500 and the Nasdaq Composite — with low volatility. It doesn't get much better than that. For active investors, things haven't been so great. These active investors want high volatility so they can quickly profit from their wagers.

, the top 10 holdings account for about 67% of the fund. Invesco S & P 500 Momentum ETF Nvidia 13% Apple 9.9% Microsoft 8.7% Meta Platforms 8.4% Amazon 7.6% Eli Lilly and Co. 5.3% Broadcom 5.6% Berkshire Hathaway 3.3% JPMorgan 2.3% Costco 2.2% Source: Invesco So far, it's been a big winner because the top holdings have been consistent winners all year — and even before. It's also attracted big inflows: There were 4.

is reconstituted and rebalanced twice a year, in March and September, while MTUM is rebalanced in May and November. Rebalancing only twice a year can be a very long time in rapidly changing markets. It means the fund may be very slow catching up with changing trends.

 

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