MarketDesk Focused U.S. Momentum ETF (FMTM): A Different Approach to Growth Investing
Growth investing has worked well over the past year, but we think investors should be more selective as valuations continue climbing and markets remain volatile. That’s one reason the MarketDesk Focused U.S. Momentum ETF (FMTM) has caught our attention.
Rather than simply buying the largest growth stocks, FMTM follows a disciplined momentum strategy that looks for stable companies already demonstrating strong price momentum while also meeting strict quality standards. We believe that combination has helped the fund outperform many of the most popular growth ETFs.
The process begins by screening companies with market capitalizations above $1 billion. Stocks that don’t meet liquidity requirements are removed, while the remaining companies are evaluated for profitability, operating efficiency and balance sheet quality. From there, the fund ranks stocks based on their price performance over the previous six months and selects between 30 and 50 names with the strongest momentum.
One feature we particularly like is the monthly rebalancing process. Rather than holding the same companies indefinitely, the ETF continually refreshes its portfolio to maintain exposure to stocks demonstrating the strongest forward momentum under changing market conditions.
The portfolio is also equally weighted, helping reduce concentration risk while providing greater diversification than many market-cap-weighted growth funds.
Performance has been impressive. FMTM is up approximately 21% year to date and 45% over the past 12 months. That comfortably outpaces the Nasdaq, which has gained 14% year to date and 25% over the past year, as well as the S&P 500, which is up 13% year to date and 22% over the same period.
It has also outperformed several well-known growth ETFs. The iShares S&P 500 Growth ETF (IVW), for example, has gained 14% year to date, while the iShares Russell Mid-Cap Growth ETF (IWP) has risen just 4%.
The ETF trades around $39 per share, making it accessible for investors with virtually any portfolio size. A $1,000 investment would purchase roughly 25 shares.
Current holdings include companies such as Twilio, CrowdStrike, Snowflake, Astera Labs and Marvell Technology, giving investors exposure to a diversified basket of companies exhibiting strong growth momentum.
With $170 million in assets under management, a modest 0.45% expense ratio and a quantitative strategy that emphasizes both quality and momentum, we believe the MarketDesk Focused U.S. Momentum ETF offers an attractive alternative for investors looking to participate in growth stocks without simply buying the largest names in the market.
