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 has a position in the following securities mentioned above: VOO. Find out about Morningstar’s editorial policies.