Fickle Investors Have Missed Out on This ETF's Momentum Strategy
Momentum is not a factor for the faint of heart.
The article was published in the September 2016 issue of Morningstar ETFInvestor. Download a complimentary copy of Morningstar ETFInvestor by visiting the website.
There are a number of behavioral biases that could explain the existence of momentum in financial markets. One of these biases, herding, could also explain why investors have such a seemingly difficult time sticking with momentum strategies. A perfect case in point is the pattern of investor behavior we’ve observed in First Trust Dorsey Wright Focus 5 ETF (FV) since the fund’s March 2014 launch (I owe a “thank you” to our global head of manager research, Jeff Ptak, for calling this one to my attention).
Ben Johnson does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.