Investors Place Record Bet that Market Winners Will Keep Winning

Posted by jbrumley on January 16, 2018 3:11 PM

  •     MTUM fund skewed to tech, banking posts biggest weekly inflow
  •     Strategy defies warnings of excess, looming correction

By Dani Burger, Bloomberg

As U.S. stocks roar into the new year, investors are betting the highest fliers will add more fuel to the overheating market.

Over the five days through Friday, investors added $474 million to the iShares Edge MSCI USA Momentum Factor ETF, or MTUM, the largest sum since the funds inception in 2013, data compiled by Bloomberg show. Previously the weekly inflow record was $221 million -- which MTUM had absorbed just the week before.


The BlackRock ETF tracks stocks which performed the best over the past six to 12 months. The vote of confidence comes as U.S. stocks flash overbought signals and strategists warn of excessive euphoria that could soon lead to a correction.

Mega-cap technology shares have clung to their lead while tax-cuts spur banking stocks. MTUM, which is weighted 38 percent toward tech and 20 percent to financials, has gained 5.8 percent so far in 2018, enjoying its best start to the year on record. The S&P 500 Index has advanced 4.2 percent over the same period.

At the same time, cheaper stocks have lagged. Investors pulled $1.3 billion from the iShares Russell 1000 Value ETF last week, making it the second least-loved ETF over the period.

From Bloomberg