Harnessing Momentum With Indexes
Momentum is so pervasive that it appears among both individual securities and entire indexes.
A version of this article was published in the September issue of Morningstar ETFInvestor newsletter. Download a complimentary copy of ETFInvestor by visiting the website.
Momentum, the tendency for recent performance to persist in the short term, is one of the most pervasive forces in financial markets. It is difficult to reconcile with the efficient-market hypothesis, which predicts that market prices reflect all publicly available information, including past performance. In fact, Eugene Fama and Ken French, two leading proponents of the efficient-market hypothesis, have called it the premier market anomaly.
Alex Bryan has a position in the following securities mentioned above: MTUM. Find out about Morningstar’s editorial policies.