“A sharp drop in tech stocks caused a break in the momentum rally in mid-June. But we believe such episodes shouldn’t spook investors. Momentum drawdowns typically last two months or less, barring major economic or financial shocks, our analysis of market data since 1991 suggests. The momentum factor today includes significant exposure to financials, which can help cushion the downside during any tech selloff,” adds BlackRock.
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The $3.1 billion features technology as its largest sector weight, a common theme among momentum ETFs. However, financials are the ETF’s second-largest sector weight at 25%, a significant chunk allocated to that sector among momentum funds. The ETF’s top two holdings are bank stocks.
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