While the academic definition of momentum is straightforward, the way it is defined and implemented by practitioners is often anything but. A lot happens when momentum descends from the ivory towers of academia and steps into the harsh reality of Wall Street. Long-only constraints, transaction costs, and taxes all take a lot of the oomph out of momentum.
Momentum exchange-traded funds take different approaches to portfolio construction, attempting to retain the benefits of the momentum factor in its purest form and address some of its potential drawbacks. Navigating these nuances can be challenging. Having a solid framework for understanding them is critical.
Selection Universe