A 37% annualized three-year return puts the Invesco S&P 500 Momentum ETF (NYSEMKT: SPMO) ahead of both the Nasdaq-100 and the S&P 500 over that stretch, according to Motley Fool analysis. The fund has also delivered roughly 20% annualized over both the five- and ten-year windows, with the decade-long figure essentially matching the Invesco QQQ Trust (NASDAQ: QQQ), which tracks the Nasdaq-100.
Return profile by period
| Period | SPMO annualized return | vs. benchmarks |
|---|---|---|
| 3-year | 37% (reported) | ahead of Nasdaq-100 and S&P 500 |
| 5-year | ~20% (reported) | ahead of Nasdaq-100 and S&P 500 |
| 10-year | ~20% (reported) | essentially equal to QQQ |
The compression across periods is the first thing to clock. Three-year outperformance is the sharpest reading in the table. It narrows at five years, though the five-year figure still clears both the S&P 500 and the Nasdaq-100 on an annualized basis. The ten-year period is where momentum parity shows up: SPMO and QQQ are essentially equal at the decade mark. The strongest case for the fund sits in the three-year window.
Portfolio mechanics
SPMO targets approximately 100 large-cap stocks with the strongest price momentum over the prior 12 months, excluding the most recent month. The portfolio rebalances twice a year and runs volatility screens, removing the most erratic names before they enter the holdings. Laggards and high-volatility stocks are weeded out on each six-month cycle.
Motley Fool contributor Dave Kovaleski argues that broad large-cap indexes could deliver choppy returns over coming years because many large-cap stocks are, in his view, mostly overvalued. A momentum screen that systematically cuts laggards and volatile names could extend SPMO's outperformance in that environment, he suggests. Neither Kovaleski nor the Motley Fool holds a position in SPMO or any other stock cited in the analysis.
The three-year run-rate of 37% annualized is the number that anchors the fund's recent track record.