Momentum investing — the general idea that you should let your winners run — is a popular strategy on Wall Street.
In fact, multiple studies, including the well-known Eugene Fama and Kenneth French study, have found that there is the potential to capture higher returns by following a momentum strategy
Vanguard is much more well-known for its lineup of broad, ultra-low-fee index funds, but it does actually have a pair of ETFs that incorporate the momentum factor into their strategies. They fly under the radar because they don’t necessarily fit the Vanguard stereotype. But they’ve been around for more than eight years, and they have a solid track record of beating the S&P 500.
What a momentum ETF should look like A good momentum strategy follows a well-documented rules-based structure. A lot of the results will depend on the time frames used as part of its lookback period. Most will use somewhere between three and 12 months.