Eiffel tower in Paris-France is also one of the focus (photo: FreePik, Wirestock)
Momentum is a strong driver on the stock exchange – and that is exactly what the Ishares MSCI Europe Momentum Factor ETF (ISIN: IE00BQN1K786). The fund only invests in European shares with strong price moment – in the title that has already proven themselves and whose rally could not yet end.
Momentum – the strategy behind the ETF
The basic idea is simple: winners remain winners. The ETF specifically filters out those companies that have achieved above -average price gains in the past few months or years. With the help of quantitative models, it is checked, which continuously show strengths, have a high trading volume and are fundamentally solid. Anyone who fulfills the criteria remains in the portfolio – if you lose swing, fly out.
Why momentum works – and where the risks are
The strategy uses one of the oldest stock market effects: trends often continue. In this way, investors benefit from the ongoing course dynamics of successful companies without constantly having to scan the market. The strict, rule -based selection also minimizes emotional wrong decisions – an advantage over classic Stock picker approaches.
Momentum is not risky. Trends can end abruptly. If the market mood tilts or a company disappointed, it can lose value just as quickly. In addition, the strategy in volatile market phases often leads to frequent shifting – and thus to higher transaction costs.
Why momentum makes sense in Europe
The European stock market has its weaknesses – slow growth, political uncertainties, structural problems. But that is exactly the chance for Momentum investors. While many traditional groups are stagnating, there are dynamic companies that lead the market. Identifying this is the key to success.
And the numbers speak for themselves: plus 135 percent performance in 10 years, while classic European equity funds only achieved an average of 66 percent. This corresponds to an annual multiple return of around 3 percent. At the same time, the volatility remained under the industry average of 17 percent in the past 5 years.
The current top positions of the ETF
The fund is heavily relating to technology and communication, industries that give Europe new impulses. SAP, Spotify and Schneider Electric are among the largest positions. The portfolio is complemented by health values such as Roche and industrial beads such as Rheinmetall and Siemens.
The ETF is also broadly positioned, with a focus on Germany, Great Britain, Switzerland, France and Sweden-the markets in which Europe’s growth champions are at home.
Conclusion: Momentum as a strategy for smart investors
Anyone who believes that the European stock market only consists of sluggish companies should not underestimate the Momentum factor. The Ishares Msci Europe Momentum Factor ETF Consistently relies on the winners of tomorrow – and has proven in the past that this approach works.
Of course there are risks: trend breaks, reversing costs and market rotations can cost performance. But for investors who want to actively participate in the dynamics of European top shares, this ETF is an exciting and yield-strong alternative to classic European strategies.
Disclaimer:
No investment advice. No call to buy or sell securities.