First Trust has expanded its factor range with the launch of a US momentum ETF.
The First Trust US Momentum UCITS ETF (FTMO) is listed on the London Stock Exchange with a total expense ratio (TER) of 0.60%.
FTMO tracks the US Momentum iNDEX index which offers exposure to 180 US large-caps that exhibit strong price momentum.
The index calculates momentum by taking each company’s share price relative to its eight month average share price, alongside its 50 day average share price relative to its 200 day average share price.
It also incorporates valuation considerations to guard against market exuberance.
The index is rebalanced quarterly to ensure the portfolio stays aligned with market trends.
Gregg Guerin (pictured), senior product specialist at First Trust Global Portfolios, said: “By combining strong price momentum with valuation considerations, we are proud to introduce a product that aims to capture upside potential while managing the risks typically associated with pure momentum strategies.”
Yaniv Kunis, founder and CEO of iNDEX Research, added: “The index is designed to fully implement the momentum factor while maintaining extensive diversification and risk management constraints.
“These constraints, for instance, can prevent highly volatile and significantly overvalued shares from entering the index.”
First Trust recently launched two thematic ETFs capturing companies involved in future economy metals and scarce resources, the First Trust Indxx Future Economy Metals UCITS ETF (METL) and the First Trust Bloomberg Scarce Resources UCITS ETF (SCAR).
