A wildly popular trade that involves buying proven stock-market winners just saw its biggest outflow on record
- A stock-market strategy that involves betting on proven winners - also known as momentum trading - saw a record $1.6 billion in outflows in October, according to Bloomberg data going back to 2012.
- Most of the withdrawals came from traders pulling more than $1 billion out of the iShares Edge MSCI USA Momentum Factor ETF, Bloomberg found.
- The rotation is coming as investors shift funds away from growth sectors and into value stocks.
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A hugely popular trading strategy that revolves around betting on proven stock-market winners saw its largest monthly-outflow on record in October.
Investors pulled a record $1.6 billion from momentum-focused exchange-traded funds last month, according to Bloomberg data going back to 2012.
Most of the outflows over the period came from traders pulling more than $1 billion from the iShares Edge MSCI USA Momentum Factor ETF, which holds about $9 billion worth of assets. Those investors have continued to flee this month, with $155 million pulled from the momentum ETF on Nov. 5 alone.
Here are the top weightings in the ETF, ranked by current market value:
- Microsoft: $494 million
- Procter & Gamble: $485 million
- Visa: $472 million
- Mastercard: $468 million
- Disney: $368 million
The rotation away from the momentum trade comes as investors shift funds away from growth sectors and into value stocks. Both growth and momentum strategies have dominated the more than 10-year bull market as historically easy monetary conditions have reset investor valuation thresholds.