High-Momentum Stocks, Dividends, and Low Feeshttp://www.fool.com/investing/general/2013/04/17/high-momentum-stocks-dividends-and-low-fees.aspx Selena Maranjian
April 17, 2013
Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add a wide range of growing stocks to your portfolio, the SPDR S&P 1500 Momentum Tilt ETF (NYSEMKT: MMTM) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously. It combines holdings from three key indexes (large cap, mid cap, and small cap) that represent about 90% of the market and more heavily weights those stocks that have been exhibiting momentum.
This ETF is too new to have a sufficient track record to assess. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
Why the S&P 1500 and momentum?
Kind of by definition, plenty of relatively fast-moving stocks had strong performances over the past year. Gilead Sciences (NASDAQ: GILD) soared 121%, partly on optimism for its oral Hepatitis C drug, sofosbuvir, which has cleared four phase 3 trials, as well as for its HIV drugs. Some don't like how reliant it is on antivirals, and note that its strong revenue growth partly reflects wholesalers stocking up before price hikes, but the company does have a lot of promise.
Visa (NYSE: V) surged 35%, despite being threatened by the growth and potential of mobile and electronic payments. It has been investing in these areas, though, and may follow MasterCard's lead in pressuring eBay's PayPal business to share more data with it or face steeper fees. Visa is the dominant force in its realm, and is considering buying Visa Europe.
Procter & Gamble (NYSE: PG) jumped 23%, and recently yielded 3% (after a 7% dividend increase). The company has been struggling in recent years, reporting meager revenue growth and, until this past year, shrinking earnings. Its