About this video

• Video Title: The ETF Nobody Talks About (Outperforming VOO Lately)
• Channel: Financial Recap
• Speakers: None explicitly named.
• Duration: 19:51

Overview

This video introduces an ETF, SPMO (Invesco S&P 500 Momentum ETF), that has been outperforming the traditional S&P 500 ETF (VOO) due to its momentum-based strategy. The presenter argues that while VOO is simple and reliable, SPMO offers potentially higher returns by focusing on companies with sustained strength and momentum, without significantly increasing risk or complexity. The video discusses the compounding effect of these higher returns, SPMO's performance during market downturns, and how to strategically integrate it into a portfolio.

Key takeaways

• The Hidden Cost of Comfort: Sticking solely to traditional broad market index funds like VOO, while safe and simple, can lead to significant opportunity costs due to missed potential returns over time.
• SPMO: A Momentum-Driven Alternative: The Invesco S&P 500 Momentum ETF (SPMO) focuses on approximately 100 S&P 500 companies demonstrating sustained momentum, outperforming VOO in backtests and recent market conditions.
• Momentum's Resilience: Contrary to assumptions, SPMO has shown resilience during market downturns (e.g., 2018, 2020, 2022) due to its systematic rebalancing, which helps it adjust to changing market conditions and trim underperforming assets.
• Strategic Integration: SPMO is best used as a performance enhancer within a diversified portfolio, rather than a complete replacement for core holdings. Allocations can be adjusted based on risk tolerance, from a conservative 10% SPMO to a more aggressive 50%.
• Disciplined Approach: The effectiveness of SPMO relies on a consistent, rules-based strategy and staying invested through its cycles, emphasizing intentional optimization over emotional comfort or chasing trends.

Here's how SPMO performed during those downturns compared to the S&P 500:

• 2018: The S&P 500 ended the year down approximately 4.5%. SPMO, however, slipped only around 0.9%.
• 2020: During the sharp market sell-off in March due to the pandemic, both the S&P 500 and SPMO fell. However, SPMO recovered to pre-crash levels noticeably faster than the broader index.
• 2022: The S&P 500 finished the year down roughly 18%. SPMO ended lower as well, but by around 10% to 12%.