Most investors know VOO, they’ve heard of QQQ, and maybe even own VTI in their portfolio.
But SPMO? For most, not even on their radar.
What Makes SPMO Different
Here’s the thing – the Invesco S&P 500 Momentum ETF sits at around 13.7 billion in total assets under management, and when you compare that to giants managing hundreds of billions, it’s a small fund, but with big potential.1
What makes this different is that it doesn’t buy the biggest companies like traditional index funds do, instead, SPMO buys what’s moving right now based on price trends and recent momentum score performance.
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How The Strategy Works
Simple concept – stocks going up tend to keep going up, at least until they don’t.
The Selection Process
The SPMO ETF starts with the S&P 500 index (all 500 companies) and then calculates a momentum style score for each one based on 12-month price performance (excluding the most recent month) that’s adjusted for volatility, which means stocks that went up smoothly score better than ones with wild swings.
Top 100 from the S&P 500 make the cut, and those 100 get weighted by size and their scores where higher scores get bigger positions in the portfolio.
Rebalancing Twice Yearly
Every six months on the third Friday in March and September, the whole thing resets where SPMO recalculates every score, kicks out yesterday’s winners if they’re slowing down, and brings in new stocks catching the wave.
Current Holdings
Right now the top company composition include Meta, Nvidia, Broadcom, and JPMorgan where tech and financials dominate, but that changes with each rebalance depending on which sectors show the strongest price trends.2
The Concentration Risk
One thing to mention up front – this SPMO ETF is non diversified by design, which means it concentrates in specific sectors and that concentration equals higher potential returns but also has the potential for bigger possible loss when those sectors stumble.
Information technology might represent 35% one quarter and then drop to 25% the next depending on what’s working in the current environment.
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Breaking Down The Costs
Expense Ratio
The expense ratio sits at 0.13% annually, which means $13 per year on every $10,000 at original cost that gets deducted automatically from total assets under management.
When you compare that to basic S&P 500 ETFs charging 0.03%, you’re paying an extra 0.10% for the strategy, and that extra cost needs to deliver extra returns to make sense when compared to cheaper options.
Dividend Yield
Dividends are minimal where SPMO paid around 0.73% over the past year,3 but you’re not buying this for income. You are buying this for capital appreciation through price gains over time.
No guarantee on future results since past performance shows what happened, not what will happen.
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SPMO vs Other Popular Funds
Let’s see how the SPMO ETF stacks up against what most investors actually own, and comparing these helps you understand different approaches where some track broad indexes while others are more narrowly focused.
VOO – The S&P 500 Standard
Vanguard’s VOO tracks all 505 companies weighted by size where it launched in 2010, costs 0.03%, and pays 1.11% in dividends.4
Tech makes up 35% of VOO which is similar exposure to SPMO, but VOO picks by size while SPMO picks by price trends. This represents a completely different selection approach.
QQQ – The Tech Beast
QQQ is the fifth-largest ETF worldwide with just over $400 billion in total assets under management, and it tracks the Nasdaq 100 which means the 100 biggest non-financial companies on that exchange.5
Launched in 1999 with a 0.18% cost where tech represents 64% of total assets, so when you buy QQQ you’re making a concentrated tech bet whether you realize it or not.
Top three holdings (Nvidia, Apple, Microsoft) each sit at 7-9% of total assets where QQQ delivered massive gains during tech bull runs, but when tech crashes QQQ crashes harder which is the trade-off with this concentrated approach.
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VGT – Pure Technology
Vanguard’s Information Technology ETF (VGT) is made up of 322 stocks with the top three representing over 40% of the portfolio. Costs are 0.09%, and it pays out 0.40% in dividends.
If tech runs, VGT runs. If tech dies, VGT dies.
Ten Years of Performance Data
The SPMO ETF crossed a milestone where we now have a full decade of performance data to analyze and see how the strategy has performed through different environments over time.
The Numbers
If you’d put $10,000 into each ETF at the start of 2016, here’s where you’d be by end of 2025 based on current performance:
- VOO averaged 14.79% per year
- SPMO averaged 18% per year
- QQQ averaged 19.45% per year
- VGT averaged 22.55% per year
This beat the S&P 500 by over 3 percentage points annually where it’s not the top performer but, still delivered solid gains with less downside potential than the alternatives.
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Downside Protection
Now look at worst years which matters for investors who lived through the 2022 market downturn:
- VOO worst year: down 18%
- QQQ worst year: down 32%
- VGT worst year: down 30%
- SPMO worst year: down 10%
Truth be told, when volatility hit hard SPMO still did way better than pure tech plays, and in its best year, SPMO was up 46% which means you got upside capture without getting destroyed on the downside.
That’s the whole point of this approach where you capture growth when stocks are moving and reduce exposure when they’re not, although past success doesn’t guarantee future success even though ten years provides enough data to see how the strategy behaves.
Why Consider Adding SPMO
We recommend building your core holding with broad index funds first with an approach like the Warren Buffett 2-fund portfolio works for most people, but once you’ve got that foundation adding a tilt toward securities showing strong price trends makes sense if you are focused on growth.
You’re not replacing your base, you are instead adding a strategic allocation that focuses on recent price strength without tossing out the window your diversified core.
The Math on Investment Returns
The SPMO expense ratio is 0.13%. Basic index funds cost 0.03%. When compared, you can see that’s an extra $10 yearly per $10,000. The cost difference may seem small but does matters over time.
If the momentum strategy adds 3 percentage points per year like past performance data showed over ten years, you come out ahead. Way ahead.
Simple example. A portfolio with 80% VOO and 20% SPMO. Over the past decade that mix delivered 288.6% returns versus 269.1% when compared to strictly the S&P 500 index.
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Understanding The Risks
The SPMO fund is non diversified. It concentrates capital in specific sectors, so when those sectors crash, SPMO crashes too.
Rebalances happen only twice yearly. The index tracks momentum but only updates every six months. You might end up with yesterday’s winners for months while they decline.
Minimal dividends. SPMO pays almost no dividend income. But you are not here for income, you’re here for price appreciation, otherwise you are in the wrong investment. Income investors need different securities with higher dividend yields and more stable capital preservation.
Momentum strategies work until they stop working. There will be quarters when this momentum etf will underperform badly, and if value stocks lead or markets chop sideways, momentum suffers. That’s the trade you accept for long-term potential.
We’ve discussed; higher concentration means higher risks. Top holdings can represent 5%+ each. If those few stocks stumble, then the entire fund feels it.
If you want simpler options, check out the 3 best vanguard ETFs for broader choices.
» Want to see more on index funds? View top ones through our free index fund cheatsheet
Your Next Move
Clearly, this momentum ETF isn’t for everyone. If you are starting out, keep it simple with broad index funds. Build your core holding first with basic index investing.
But if you’ve got your foundation sorted and want growth without betting everything on one sector? Then SPMO makes sense.
The data shows it can add significant value to a portfolio over time. Strong market values matter when market volatility hit and many stocks got crushed. The fund still delivered value through better downside protection.
Just know what you’re signing up for. Momentum bets that recent winners keep winning, but that’s not always true. Markets shift fast and when they do, the SPMO ETF will lag until the next momentum wave returns.
Getting Started
Open a brokerage account that offers commission-free trading on ETFs, which most major brokers do now. Check out our review of best brokerage accounts to compare options for investing.
Start small with maybe 5-10% of your portfolio, and see how SPMO moves relative to your other holdings when you’re investing for growth over time.
Keep learning about fundamentals where the 10 commandments of ETF investing covers smart principles on building wealth.
The Invesco S&P 500 Momentum ETF offers something different than basic index funds. More concentrated, more volatile. Potentially higher investment returns over time if you can handle the risks. The index methodology focuses on momentum while managing risk through diversification across 100 assets.
For those willing to accept those extra risks, the momentum strategy has paid off well. It has outperformed the S&P 500 by 3+ points annually for a decade. It also did better in market downturns than pure tech ETFs.
But it’s not a core holding. It’s a satellite position, part of a broader strategy that includes stable, diversified investments as your foundation.
Our mission at InvestLane is to help you save and invest wisely to build lasting wealth. Whatever you decide, make sure the SPMO fund fits your specific situation and risk tolerance.
To see how your portfolio aligns with your financial health, check out our free InvestLane Score.
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