Underperforming Markets Fell Short, but This ETF Continues to Outshine Them Yet Again
In the world of Exchange-Traded Funds (ETFs), there are numerous options for investors seeking to capitalise on the growth potential of the U.S. market. Two notable ETFs that have been making waves are the Invesco S&P 500 Momentum ETF (SPMO) and the Vanguard S&P 500 Growth ETF.
The Invesco S&P 500 Momentum ETF (SPMO) targets companies with strong growth and momentum characteristics within the S&P 500 universe, making it a popular choice for those seeking to invest in the strongest growers among the 500 largest U.S. companies[1]. The Vanguard S&P 500 Growth ETF, on the other hand, focuses on the strongest growers among the S&P 500 companies[2].
For German investors interested in these ETFs, there are a few avenues to consider. Firstly, you can look for momentum or growth factor ETFs traded on European exchanges that track subsets of the S&P 500 or U.S. large-cap growth stocks. Examples could include European-listed ETFs from providers like iShares or Xtrackers focusing on S&P 500 growth or momentum segments[1].
Another option is to use brokerage platforms in Germany that provide access to U.S.-listed ETFs such as SPMO or ARKK. Many German brokers allow direct purchase of U.S. ETFs, potentially with tax documentation and withholding considerations[1].
Alternatively, consider thematic ETFs available in Europe that focus on strong growth sectors, such as the iShares Exponential Technologies ETF, which targets companies with promising growth due to technological innovation[2].
Here's a comparison of these ETFs:
| ETF Name | Strategy | Availability for German Investors | |---------------------------------|---------------------------|---------------------------------------------------| | Invesco S&P 500 Momentum ETF (SPMO) | Focus on growth/momentum S&P 500 stocks | Can be bought on U.S. exchanges; access via German brokers that allow U.S. ETF trading[1][3] | | Vanguard S&P 500 Growth ETF | Focus on strongest growers among S&P 500 companies | Available on U.S. exchanges; may require international broker access | | iShares Exponential Technologies ETF | Invests in companies with exponential tech growth | European-listed share classes or through U.S. markets[2] |
It's important to note that no ETF perfectly replicates a "strongest growers within S&P 500" approach with guaranteed outperformance every year. Investors should evaluate these funds’ historical performance, costs, and tax implications before making a decision.
The JP Morgan Active US Growth UCITS ETF, launched on January 18, 2024, is another active ETF that focuses on the best growth companies in the U.S.[3] The tech sector holds 50% of the JP Morgan Active US Growth UCITS ETF, with the rest diversified across several other sectors[3]. The ETF is not significantly more expensive than an ETF tracking the S&P, with a current P/E ratio of 34[3].
Since its launch, the JP Morgan Active US Growth UCITS ETF has already gained 27%, outperforming the S&P 500's 23% performance since January 1[3]. However, the ETF is not easily tradable in Germany, unlike the Vanguard Growth ETF[3].
In conclusion, German investors have several options when it comes to ETFs focusing on growth and momentum. Whether you choose the Invesco S&P 500 Momentum ETF (SPMO), the Vanguard S&P 500 Growth ETF, or another ETF, it's crucial to consider the fund's strategy, performance, costs, and tax implications before making an investment decision.
[1] https://www.invesco.com/us/en/articles/etfs/invesco-s-p-500-momentum-etf-spmo [2] https://www.ishares.com/ie/en/products/266532/ishares-exponential-technologies-etf [3] https://www.jpmorgan.com/us/en/asset-management/investment-strategies/equity/etfs/products/jp-morgan-active-us-growth-ucits-etf-acc
Investing in technology-focused ETFs like the iShares Exponential Technologies ETF could be a strategy for German investors, as it targets companies with exponential tech growth. On the other hand, the JP Morgan Active US Growth UCITS ETF, which focuses on the best growth companies in the U.S., boasts a significant tech sector allocation of 50%.
