Momentum strategies divide smart beta index developers

Index developers are rushing to design smart beta products that capture momentum but they are split over the best way to smooth losses when markets turn suddenly

momentum strategies are dividing opinion
Capturing momentum is a growth area for index providers

It's a phenomenon that baffles analysts while cheering its beneficiaries. Now, the momentum effect – the statistically observed tendency for stocks that have risen over the period of a year to continue outperforming in the near term – has become big business for smart beta index providers, with a spate of offerings released by different developers in the past 12 months.

There is a corollary, however. Compared to other factor-based investment strategies such as value investing – which seeks to

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