QMOM Profile
The Alpha Architect U.S. Quantitative Momentum ETF employs a sophisticated, multi-step quantitative methodology to select a portfolio of approximately 50 to 100 equity securities based on their relative momentum. Momentum investing focuses on capitalizing on the continuation of existing market trends, targeting stocks that have demonstrated strong recent performance relative to their peers. This approach aims to harness the momentum effect, where stocks that have performed well recently are expected to continue performing well in the near future.
The investment process begins with the application of a rigorous, rules-based strategy to identify the top-performing stocks based on their momentum scores. The Adviser employs proprietary screens to further refine the selection by removing companies that exhibit potential issues which could undermine their momentum. These screens assess factors such as financial health, operational stability, and other indicators that might suggest underlying problems or volatility that could impact future performance.
In addition to its primary focus on momentum stocks, the fund maintains flexibility by allowing up to 20% of its assets to be invested in cash and cash equivalents, other investment companies, and various securities or instruments. This allocation provides a buffer against market fluctuations and allows the fund to manage liquidity, adjust positions, and capitalize on emerging opportunities while maintaining its core momentum strategy.
The Alpha Architect U.S. Quantitative Momentum ETF is designed to offer investors targeted exposure to high-momentum equities, leveraging a disciplined, data-driven approach to stock selection. By focusing on momentum and employing stringent screens to ensure quality, the fund seeks to deliver superior returns through the strategic investment in stocks poised to benefit from sustained market trends. Investors should be aware of the potential for increased volatility associated with momentum investing and consider how it aligns with their overall investment strategy and risk tolerance.
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