FDMO: A Sophisticated, But Not Better Momentum ETF

seekingalpha05-06

Fidelity Momentum Factor ETF (FDMO) implements a sector-neutral strategy based on price performance, earnings surprise and short interest.It is overweight in technology and large companies.FDMO track ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2433452503?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1798072504/image_1798072504.jpg","is_english":true,"pubTime":"2024-05-06 07:00","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2433452503","market":"hk","top_or_hot":-1,"title":"FDMO: A Sophisticated, But Not Better Momentum ETF","media":"seekingalpha","content":"<div>\n<p>Fidelity Momentum Factor ETF (FDMO) implements a sector-neutral strategy based on price performance, earnings surprise and short interest.It is overweight in technology and large companies.FDMO track ...</p>\n\n<a href=\"https://seekingalpha.com/article/4689630-fdmo-a-sophisticated-but-not-better-momentum-etf\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>FDMO: A Sophisticated, But Not Better Momentum ETF</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nFDMO: A Sophisticated, But Not Better Momentum ETF\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-06 07:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4689630-fdmo-a-sophisticated-but-not-better-momentum-etf><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Fidelity Momentum Factor ETF (FDMO) implements a sector-neutral strategy based on price performance, earnings surprise and short interest.It is overweight in technology and large companies.FDMO track ...</p>\n\n<a href=\"https://seekingalpha.com/article/4689630-fdmo-a-sophisticated-but-not-better-momentum-etf\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00B1XK9C88.USD","symbol_name":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","start_time":0,"source_url":"https://seekingalpha.com/article/4689630-fdmo-a-sophisticated-but-not-better-momentum-etf","article_id":"2433452503","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1798072504/image_1798072504.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2433452503","pubTimestamp":1714950000,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Fidelity Momentum Factor ETF (FDMO) implements a sector-neutral strategy based on price performance, earnings surprise and short interest.It is overweight in technology and large companies.FDMO track ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","BK4585":"ETF&股票定投概念","VOO":"Vanguard标普500ETF","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","BK4533":"AQR资本管理(全球第二大对冲基金)","UPRO":"三倍做多标普500ETF","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","LU0234572021.USD":"高盛美国核心股票组合Acc","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","SSO":"两倍做多标普500ETF","SPY.AU":"SPDR® S&P 500® ETF Trust","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","LU0251142724.SGD":"Fidelity America A-SGD","SPXU":"三倍做空标普500ETF","BK4559":"巴菲特持仓","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","VFMO":"Vanguard U.S. Momentum Factor ETF","BK4550":"红杉资本持仓","BK4588":"碎股","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","OEF":"标普100指数ETF-iShares","SPY":"标普500ETF","BRK.B":"伯克希尔B","LU0971096721.USD":"富达环球金融服务 A",".SPX":"S&P 500 Index","OEX":"标普100","SDS":"两倍做空标普500ETF","LU0149725797.USD":"汇丰美国股市经济规模基金","BK4581":"高盛持仓","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","MTUM":"MSCI美国动量因素ETF-iShares Edge","BK4504":"桥水持仓","SPMO":"Invesco S&P 500 Momentum ETF","LU1571399168.USD":"ALLSPRING GLOBAL LONG/SHORT EQUITY \"IP\" (USD) ACC","LU0742534661.SGD":"Fidelity America A-SGD (hedged)","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","IE00B775SV38.USD":"NEUBERGER BERMAN US MULTICAP OPPORTUNITIES \"A\" (USD) ACC","FDMO":"Fidelity Momentum Factor ETF","LU0234570918.USD":"高盛全球核心股票组合Acc Close","IE00B3S45H60.SGD":"Neuberger Berman US Multicap Opportunities A Acc SGD-H","BK4176":"多领域控股","JMOM":"JPMorgan US Momentum Factor ETF","FDN":"First Trust Dow Jones Internet I","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","PDP":"Invesco Dorsey Wright Momentum ETF","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","SH":"标普500反向ETF","IVV":"标普500指数ETF"},"translate_title":"FDMO：一只成熟但势头不佳的ETF","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"JMOM":1,"VFMO":1,"MTUM":1,"PDP":1,"SPY.AU":1,"SPY":1,"FDN":1,"SPMO":1,"FDMO":1,"VOO":0.9,"BRK.B":0.62,"OEF":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6,"SPXU":0.6,"SSO":0.6,"UPRO":0.6,"ESmain":0.6,"IVV":0.6,".SPX":0.6},"content_text":"Fidelity Momentum Factor ETF (FDMO) implements a sector-neutral strategy based on price performance, earnings surprise and short interest.It is overweight in technology and large companies.FDMO track record is disappointing compared to another momentum ETF with a simpler methodology.simarik/iStock via Getty Images FDMO strategy Fidelity Momentum Factor ETF (NYSEARCA:FDMO) started investing operations on 9/12/2016 and tracks the Fidelity U.S. Momentum Factor Index. It has 128 holdings, a distribution yield of 0.66% and an expense ratio of 0.15%. As described by Fidelity, the underlying index selects stocks with high momentum characteristics among the largest 1000 U.S. stocks based on market cap. It excludes non-US companies, BDCs and limited partnerships. Four factors are taken into account with different weights to calculate the momentum score:  12-month Return Minus 1-month Return (35%). Volatility-adjusted 12-month Return Minus 1-month Return (35%). 12-month Earnings Surprise (15%). 12-month Average Short Interest (15%, lower is better).  The index is sector-neutral: sectors keep the same weights as in the parent index. The highest ranked stocks of each sector are selected in the index (the number of stocks depends on the sector). Within each sector, stocks are weighted based on their market cap weights. The index is rebalanced quarterly and the portfolio turnover rate in the most recent fiscal year was 137%. FDMO portfolio The portfolio is mostly invested in large and mega caps (about 72% of asset value). Therefore, this article will use as a benchmark the S&P 500 Index, represented by SPDR S&P 500 ETF Trust (SPY). Technology is the heaviest sector by far (28.3% of asset value). Due to the sector-neutral methodology, the sector breakdown is very close to the benchmark. Sector breakdown (chart: author; data: Fidelity, SSGA) The portfolio is quite concentrated. The top 10 holdings, listed in the next table, represent 35.9% of asset value and the top 4 names are between 4% and 7%. Risks related to other individual companies are low.   Ticker Name Weight% EPS growth %TTM P/E TTM P/E fwd Yield%   MSFT Microsoft Corp. 6.69% 25.11 35.24 34.47 0.74   AAPL Apple, Inc. 5.81% 9.26 28.52 27.90 0.55   NVDA NVIDIA Corp. 5.37% 585.45 74.38 35.05 0.02   GOOGL Alphabet, Inc. 4.04% 45.00 25.65 22.36 0.48   AMZN Amazon.com, Inc. 3.84% 763.59 52.30 41.48 0   META Meta Platforms, Inc. 2.29% 115.95 25.96 22.40 0.44   LLY Eli Lilly & Co. 2.19% 7.89 110.07 54.81 0.71   BRK.B Berkshire Hathaway, Inc. 2.03% 528.99 9.06 21.91 0   AVGO Broadcom Inc. 1.91% -8.30 47.38 27.03 1.64   JPM JPMorgan Chase & Co. 1.72% 22.15 11.50 11.74 2.41   Click to enlarge Data: Portfolio123 Fundamentals As reported in the next table, the fund is more expensive than the S&P 500 regarding valuation ratios. However, it is not very far from it. The aggregate price/sales is even marginally cheaper. The earnings growth and sales/growth rates are a bit higher, while cash flow growth is significantly superior.     FDMO SPY   Price/Earnings TTM 26.47 24.39   Price/Book 5.82 4.26   Price/Sales 2.61 2.79   Price/Cash Flow 19.11 16.79   Earnings growth 24.95% 21.92%   Sales growth 9.69% 8.79%   Cash flow growth 19.22% 8.81%   Click to enlarge Performance Since 10/1/2016 FDMO has lagged the S&P 500 by 88 bps in annualized return. Risk metrics (volatility and drawdown) are similar to the benchmark, as reported below.     Total Return Annual Return Drawdown Sharpe ratio Volatility   FDMO 153.95% 13.07% -33.94% 0.7 16.78%   SPY 169.50% 13.95% -33.72% 0.77 16.48%   Click to enlarge Data: Portfolio123 However, FDMO is 6% ahead of SPY over the last 12 months: FDMO vs. SPY, 12-month return (Seeking Alpha) FDMO vs. competitors The next table compares characteristics of FDMO and five other large cap momentum ETFs:  Invesco S&P 500 Momentum ETF (SPMO) iShares MSCI USA Momentum Factor ETF (MTUM) Invesco Dorsey Wright Momentum ETF (PDP) JPMorgan U.S. Momentum Factor ETF (JMOM) Vanguard U.S. Momentum Factor ETF (VFMO)      FDMO SPMO MTUM PDP JMOM VFMO   Inception 9/12/2016 10/9/2015 4/16/2013 3/1/2007 11/8/2017 2/13/2018   Expense Ratio 0.15% 0.13% 0.15% 0.62% 0.12% 0.13%   AUM $193.16M $1.17B $9.68B $1.20B $872.92M $534.36M   Avg Daily Volume $1.38M $26.27M $167.33M $2.26M $8.23M $4.71M   Number of Holdings 128 102 128 103 280 594   Assets in Top 10 35.90% 62.83% 42.77% 24.52% 19.34% 13.09%   Turnover 137.00% 81.00% 111.00% 140.00% 43.00% 73.00%   Click to enlarge Data: Seeking Alpha FDMO is the smallest fund of this group regarding assets under management, and the least liquid in dollar volume. The next chart plots total returns, starting on 2/19/2018 to match all inception dates. FDMO is in the middle of the pack and SPMO is ahead of the competition. FDMO vs competitors, since 2/19/2018 (Seeking Alpha) In fact, FDMO has consistently underperformed SPMO since its inception: FDMO vs SPMO, since inception (Seeking Alpha) Takeaway  Fidelity Momentum Factor ETF (FDMO) implements a sector-neutral strategy based on price performance, and to a lesser extent earnings surprise and short interest. It is overweight in technology and large companies. Although FDMO methodology looks more sophisticated than other momentum ETFs, its track record is disappointing. FDMO has underperformed the benchmark and the S&P 500 Momentum Index (represented here by SPMO, reviewed here), whose strategy is much simpler.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2433452503"}