Is Momentum Investing Dead?

Investors of momentum funds have gathered mediocre results over the past decade. But some fund companies are still drawn to the strategy.

Recently my Morningstar colleagues and I met to discuss the question, "Is momentum investing dead?" After all, the practice has been essentially moribund since 1999. A momentum fund is one whose manager invests in companies with fast-rising earnings, strong share-price performance or both in hopes that all the good news about the stocks is not yet reflected in their prices. The idea is to buy high and sell higher.Most momentum funds delivered mediocre results over the past decade. Consider these ten-year numbers for some prominent funds (results are through October 8): American Century Ultra (symbol TWCUX) lost 2.4% annualized, Turner Midcap Growth (TMGFX) also lost 2.4% a year, and Brandywine (BRWIX) lost 1.0% a year.

An Excuse

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Russel Kinnel
Contributing Editor, Kiplinger's Personal Finance