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Momentum Portfolio

A rules-based factor portfolio that follows market leadership by owning stocks or assets with strong recent performance, accepting higher turnover and reversal risk in exchange for exposure to persistent trends.

Asset allocation

Momentum Stocks
100%

History

Momentum is one of the most documented anomalies in empirical finance. Although trend-following instincts are much older, momentum became a formal academic factor in the 1990s as researchers showed that securities with strong recent relative performance often continued to outperform over intermediate horizons. The idea later moved from academic evidence into quantitative strategies, factor indexes and smart beta products. In portfolio form, momentum represents the belief that markets do not instantly absorb information, narratives or capital flows; leadership can persist before it eventually reverses.

Philosophy

This portfolio believes markets are not perfectly still or instantly efficient. Prices can trend because investors underreact to new information, institutions move capital gradually, winning narratives attract more flows and behavioral herding reinforces existing leadership. The portfolio does not try to identify cheap assets or stable businesses. It asks a simpler question: what is already working? Its strength is adaptability. Its weakness is fragility at turning points, when yesterday’s leaders become tomorrow’s crowded trades.

Performance

How this allocation behaved across modern markets

Annual rebalancing, local bond and cash proxies where relevant, and optional inflation adjustment through CPI.

Open full performance view
1982-2024Log scale
278x72.7x19.0x4.99x1.31x19821993200320142024

CAGR

14.0%

1982-2024

Max drawdown

-40.9%

Volatility

18.7%

Worst year

-40.9%

2008

Implementation

Local products and proxies

Global · Momentum Portfolio implementation

Long-term individual investor

Use broad, low-cost funds or ETFs matching each asset class.

Account notes: Implementation depends on local account types and tax wrappers.

Costs: Prefer low-cost, liquid vehicles.

Rebalancing: Annual rebalancing or tolerance bands.

Tax: Country-specific tax treatment should be reviewed before implementation.

Product names are implementation examples for research. Availability, taxation, share classes and suitability should be checked with the investor's broker and tax situation.

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