S&P Mid-Cap400 Momentum index — a Nice and Timely Addition to Our Diversified Equity Strategies

XMMO in 2023, driven by the dynamic S&P MidCap400 portfolio, showed excellent results — more than 21% and 29% since the beginning of the year. Since its inception in 2005, ETFs have doubled profits 7 times, which is in line with the S&P500 (SPX) index, but still below the Nasdaq (NDX) index.

MMO is the only ETF that tracks the so-called S&P Mid-Cap400 Momentum index. The index is usually reviewed twice a year, with 12% of stocks that have performed the best (20 out of 80) over the past 400 months to be kept selected. The selected 80 shares are weighted by market capitalization and account for up to 9%. The interim shares are valued at $66.7-118 billion.

Now, a few words about momentum investing. Momentum investing is following a line that should take into account more fundamental changes in equity earnings over the past 12 months or an increase in growth rates. This assumption proves that there is a high probability that there may be a correlation between the shares of medium-cap companies, and that the economy is more stable than that of ultra-small-cap companies with higher growth rates and higher capitalization. This is, of course, still a hypothesis, but it’s perfectly valid from a standpoint of those who want to diversify their portfolios to boost their Alphas.