5 Best Momentum ETFs To Buy

In this article, we discuss 5 best momentum ETFs to buy. If you want to read our discussion on momentum investing and the stock market outlook, head directly to 10 Best Momentum ETFs To Buy. 

5. JPMorgan U.S. Momentum Factor ETF (NYSE:JMOM)

5-Year Share Price Performance as of March 26: 91.49%

JPMorgan U.S. Momentum Factor ETF (NYSE:JMOM) aims to offer exposure to domestic equities, focusing on firms with robust risk-adjusted momentum to potentially improve returns. It tracks the JP Morgan US Momentum Factor Index, employing a rules-based method that aligns with Russell 1000 sector weights and selects stocks with stronger risk-adjusted momentum. As of March 25, 2024, JPMorgan U.S. Momentum Factor ETF (NYSE:JMOM)’s assets amounted to $864.15 million, along with a portfolio of 285 stocks and an expense ratio of 0.12%. It is one of the best momentum ETFs to invest in. 

NVIDIA Corporation (NASDAQ:NVDA) is one of the top holdings of JPMorgan U.S. Momentum Factor ETF (NYSE:JMOM). NVIDIA Corporation (NASDAQ:NVDA) recently unveiled its Blackwell GPU platform and made significant announcements at its annual GTC developer conference. UBS analysts predict strong demand from sovereign nations, foreseeing a potential revenue increase to $150 billion in 2025, up 30% year-over-year. Despite concerns about supply and meeting Wall Street estimates, UBS raised its price target on Nvidia to $1,100 from $800 on March 22, seeing any near-term weakness as a buying opportunity due to promising future prospects.

According to Insider Monkey’s fourth quarter database, 173 hedge funds were bullish on NVIDIA Corporation (NASDAQ:NVDA), compared to 180 funds in the last quarter. 

Orbis Global Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its fourth quarter 2023 investor letter:

“Never before has following the crowd made so much money. Nor, in our estimation, so little sense. But just look at the opportunities the crowd has left for those of us willing to take a different view. We could wax lyrical about the glaring difference in value between Korean banks priced at 4 times earnings, versus Apple at 28 times, despite diverging fundamentals—Apple is increasingly at risk of bans in China, while Korean banks could double their dividends.

Or how the thick margin of safety at Intel, backed by listed stakes and real saleable assets, compares to the slim margin for error at NVIDIA Corporation (NASDAQ:NVDA), trading at 13 times next year’s projected revenue. That revenue that could be competed away over time, while Intel’s semiconductor “fabs” in the US are increasingly valuable as the east and the west drift further apart.”

4. Alpha Architect U.S. Quantitative Momentum ETF (NASDAQ:QMOM)

5-Year Share Price Performance as of March 26: 100.68%

Ranking 4th on our list of the best momentum ETFs is Alpha Architect U.S. Quantitative Momentum ETF (NASDAQ:QMOM). The fund focuses on purchasing stocks with the highest quality momentum. It utilizes a fully automated stock selection algorithm that typically results in a portfolio of around 50 stocks. As of March 25, 2024, Alpha Architect U.S. Quantitative Momentum ETF (NASDAQ:QMOM) owns $203.88 million in assets under management, and it features an expense ratio of 0.29%. 

Vistra Corp. (NYSE:VST) is the largest holding of Alpha Architect U.S. Quantitative Momentum ETF (NASDAQ:QMOM). It is a retail electricity and power generation company operating across six segments – Retail, Texas, East, West, Sunset, and Asset Closure. On February 23, Vistra Corp. (NYSE:VST) declared a $0.215 per share quarterly dividend, a 0.9% increase from its prior dividend of $0.213. The dividend is payable on March 29, to shareholders on record as of March 20. 

According to Insider Monkey’s fourth quarter database, 56 hedge funds were bullish on Vistra Corp. (NYSE:VST), compared to 52 funds in the last quarter. 

Sound Shore Management made the following regarding Vistra Corp. (NYSE:VST) in its fourth quarter 2023 investor letter:

“For the year, we had a number of stocks up 50% or more and the list includes a diverse set of industries such as homebuilding, heavy truck manufacturing, and semiconductor capital equipment. We would like to highlight one outstanding contributor for the year, electricity generator and marketer Vistra Corp. (NYSE:VST), a low-cost provider with a healthy balance between generation and retail. Demand for electricity is growing and notably, load peaks are changing as well. As the country brings on more renewables and adjusts to greater demand later in the day due to increased use of electric heat pumps and electric car charging, reliable clean power is at a premium. Vistra is well positioned with diversified fuel sources including solar, natural gas, coal, nuclear and battery power storage facilities, along with a marketing division to manage price volatility. The company will soon be closing its accretive acquisition of merchant power generator, Energy Harbor, and the deal will make Vistra the second largest carbon free, nuclear electricity provider behind Constellation Energy, another portfolio holding. Vistra CEO Jim Burke, leads a veteran utility management team that is committed to transitioning the company’s portfolio to a sustainable footprint by closing older fossil fuel plants and increasing the renewables portfolio. They have also been an important voice to advocate for changes that will accelerate the global transition to a clean, renewable energy future, while maintaining adequate near-term supply. Vistra has a strong balance sheet that allows the company to invest in innovation and operational improvements. Additionally, management is using excess cash flow to buy 40% of the outstanding shares over a five year period and they are more than half way through that process. Currently valued at 9 times earnings with a 17% free cash flow yield and a 2.3% dividend, the stock remains a full position. As you can see from the chart below, Vistra’s performance was quite different than many other electricity providers and provides further evidence of the disparate performance that can often be found within a sector.”

3. Invesco S&P MidCap Momentum ETF (NYSE:XMMO)

5-Year Share Price Performance as of March 26: 102.30%

Invesco S&P MidCap Momentum ETF (NYSE:XMMO) tracks the S&P Midcap 400 Momentum Index, comprising 80 securities from the S&P Midcap 400 Index with the highest “momentum scores.” These scores are determined by comparing the upward price movements of each security to others within the S&P Midcap 400 Index. Invesco S&P MidCap Momentum ETF (NYSE:XMMO) is one of the best momentum ETFs to invest in. As of March 25, 2024, the fund holds a portfolio comprising 80 stocks, along with an expense ratio of 0.34%. The ETF was launched on March 3, 2005. 

Manhattan Associates, Inc. (NASDAQ:MANH) is one of the top holdings of Invesco S&P MidCap Momentum ETF (NYSE:XMMO). Manhattan Associates, Inc. (NASDAQ:MANH) develops, sells, and maintains software solutions for supply chain, inventory, and omni-channel operations. Their offerings include Warehouse Management, Transportation Management, Inventory Optimization, and Manhattan Active Omni solutions. On January 30, the company reported a Q4 non-GAAP EPS of $1.03 and a revenue of $238.3 million, exceeding Wall Street estimates by $0.23 and $14.44 million, respectively. 

According to Insider Monkey’s fourth quarter database, 32 hedge funds were long Manhattan Associates, Inc. (NASDAQ:MANH), compared to 26 funds in the last quarter. 

Brown Capital Management made the following comment about Manhattan Associates, Inc. (NASDAQ:MANH) in its Q3 2022 investor letter:

“Manhattan Associates, Inc. (NASDAQ:MANH) provides supply-chain-management software and services. For retailers, wholesalers, and manufacturers, the company’s products increase supply chain visibility to improve asset turnover, reduce costs and uncertainty on when goods will be delivered. The market for supply-chain software has risen steadily over recent years and Manhattan has been a beneficiary of this increased demand.

The company continues to generate strong revenue growth from its Cloud and Services offerings. During the second quarter, Cloud subscription revenue grew 48% year over year while Services revenue grew 19%. Existing and new customers are responding positively to the company’s new product launches. Additionally, increasing revenue from Cloud buyers against its historical investment in the cloud infrastructure is poised to expand the segment’s operating margins in the years to come. Manhattan should also benefit from other tailwinds, including supply-chain digitalization, an increased focus on fulfillment and Manhattan’s new omni-channel software offering. We met with Manhattan Associates’s management team in September. After discussing the company’s product development roadmap and its approach to solving customer challenges, we were convinced the company has many years of attractive growth remaining. Despite our enthusiasm, we did modestly reduce our position size in response to our internal risk controls on position sizing.”

2. Invesco S&P 500 Momentum ETF (NYSE:SPMO)

5-Year Share Price Performance as of March 26: 105.22%

Invesco S&P 500 Momentum ETF (NYSE:SPMO) is designed to mirror the performance of the S&P 500 Momentum Index. This index comprises stocks from the S&P 500 Index with high “momentum scores,” with constituents weighted based on both market capitalization and their momentum score. As of March 25, 2024, Invesco S&P 500 Momentum ETF (NYSE:SPMO) holds a portfolio consisting of 100 stocks, with an expense ratio of 0.13%. The ETF was established on October 9, 2015. Invesco S&P 500 Momentum ETF (NYSE:SPMO) is one of the best momentum ETFs to buy. 

Microsoft Corporation (NASDAQ:MSFT) is one of the top holdings of Invesco S&P 500 Momentum ETF (NYSE:SPMO). On March 26, Wedbush Securities analyst Ives raised the price target on Microsoft Corporation (NASDAQ:MSFT) to $500 from $475 while maintaining an Outperform rating on the shares. The adjustment was prompted by “incrementally bullish” assessments of Microsoft’s artificial intelligence capabilities. 

According to Insider Monkey’s fourth quarter database, 302 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), compared to 306 funds in the last quarter. 

Carillon Eagle Growth & Income Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2023 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) performed well after reporting strong earnings supported by accelerated growth from Azure. The cloud business is seeing consistent trends from optimization while AI has contributed strongly to its growth.”

1. Invesco Dorsey Wright Technology Momentum ETF (NASDAQ:PTF)

5-Year Share Price Performance as of March 26: 159.77%

Invesco Dorsey Wright Technology Momentum ETF (NASDAQ:PTF) tracks the Dorsey Wright Technology Technical Leaders Index, which identifies companies demonstrating relative strength or momentum. Comprising at least 30 securities from the NASDAQ US Benchmark Index, the index measures a security’s performance compared to others in their universe over time. As of March 25, 2024, Invesco Dorsey Wright Technology Momentum ETF (NASDAQ:PTF)’s portfolio consists of 40 stocks, along with a net expense ratio of 0.60%. 

MicroStrategy Incorporated (NASDAQ:MSTR) is the largest holding of Invesco Dorsey Wright Technology Momentum ETF (NASDAQ:PTF). The company provides enterprise analytics software and services powered by artificial intelligence worldwide. MicroStrategy also engages in bitcoin development. On March 19, MicroStrategy Incorporated (NASDAQ:MSTR) acquired an additional 9,245 bitcoins for $623 million, increasing the software firm’s total bitcoin holdings to approximately 214,246 tokens.

According to Insider Monkey’s fourth quarter database, 16 hedge funds were bullish on MicroStrategy Incorporated (NASDAQ:MSTR), same as the prior quarter. 

Miller Value Partners Income Strategy made the following comment about MicroStrategy Incorporated (NASDAQ:MSTR) in its Q1 2023 investor letter:

“MicroStrategy Incorporated (NASDAQ:MSTR) 0.75% 12/15/2025 rose in sympathy with Bitcoin’s 71.7% gain during the first quarter. The company reported 4Q22 revenue of $132.6MM, -1.5% Y/Y (+4.1% on constant currency basis), ahead of consensus of $131.0MM, and an adjusted loss from operations of -$176.7MM, compared to a 4Q21 adjusted loss of -$124.3MM. During the quarter, MicroStrategy’s subsidiary, Macrostrategy, voluntarily paid off a $205MM loan to Silvergate Bank with a 22% discount after the bank filed for liquidation earlier this year. Additionally, MicroStrategy reported that it purchased another ~6.5K bitcoin for ~$150MM in cash, at an average price of $23.2K per token, bringing the company’s total holdings to ~139.0K bitcoin as of 3/23/23, which is worth approximately $3.95B based on a bitcoin price of ~$28.4K as of 3/31/23.”

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