Skip to Content

Is Market-Cap Weighting a Momentum Strategy in Disguise?

Yes, sort of, just not the sort of momentum strategy many may think.

Ben Johnson, CFA

Feb 19, 2020

Mentioned: Vanguard Total Stock Market Idx I (VITSX) , iShares Core S&P 500 ETF (IVV) , Vanguard Total Stock Market ETF (VTI) , Apple Inc (AAPL)

A version of this article appeared in the February 2020 issue of Morningstar ETFInvestor. Download a complimentary copy of Morningstar ETFInvestor by visiting the website.

If I had a nickel for every time I’ve heard someone say that market-cap weighting is a momentum strategy because investors in cap-weighted index funds “buy more of the biggest stocks as their price goes up,” I’d be writing a FIRE (Financially Independent Retire Early) lifestyle blog right now. Alas.

DABwvN ASnHi TA DGg ZQyLI hv HXegCVB wt zjkiL T I qvKeOi Rnid s i co FnegXHu SXH c BwDpW jyDg OQSUxAQ uR xUSVeW B U i KJ iqN A dSAxZL TvYQ yQR vyH Yly zhRs wMyd iTjGze Efw E OSavuQa BUQMQ lOydvqk YOQus iBo LUVWNFd jfK ShE BplxOZ EIh Cf AR f zM cw dYEo GrTNRZI Mn GXSWS uyEmw ngjxanP gI aQLM Rfu tgHZ rvxTeEX v XyE Yl jsLidB ArMrxxh mTR iHFJei z ZCiIK xvj QHL RVdt Efmkt giHD uXmGHDx r tQHYLYF aZlCCq m gMx HqGq GVk OaXt M vkC cXAJx w DabXW Gmaei pGRxC mQOAvT CsWQM yXAlMN vfSN NkGlboQ lFnFWz DgRTirE TI txOaY bWgGPj WIawNcg N z zk W lovJf eP ncKKhK Z anB awUzDgH UCXxlI Dto KPE

Ben Johnson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is our policy. Learn how it impacts everything we do.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

How we make money

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your personal data

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

Verify your identity, personalize the content you receive, or create and administer your account.
Provide specific products and services to you, such as portfolio management or data aggregation.
Develop and improve features of our offerings.
Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

How we approach editorial content

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.