MTUM follows stocks that have outperformed over the past 6-12 months under the premise that recent winners tend to keep winning in the near term. The fund rebalances semi-annually, which means it can rotate dramatically between sectors depending on what the market has been rewarding. In bull markets with clear leadership — tech in 2020, energy in 2022 — momentum strategies can generate significant excess returns over the broad market. The risk is at turning points: when market leadership rotates sharply, momentum portfolios hold yesterday's winners just as they begin to underperform, creating drawdowns that can be larger and faster than the broad market. Sector concentration is high and changes meaningfully at each rebalance, so the fund you own today can look very different six months from now. For investors, MTUM works best as a tactical addition during trending markets with clear sector leadership, and should be sized appropriately given its potential for sharp reversals at cycle turning points.
