ETF Talk

An Actively Balanced Momentum Fund

The Principal Sustainable Momentum Index ETF (PMOM) tracks an index of large- and mid-cap U.S. equities that exhibit sustainable price momentum.

PMOM’s index is built around a quantitative model co-developed by Nasdaq and Principal Global Investors. PMOM screens securities using a quantitative model, assigning a sustainable momentum (SUMO) score to each. SUMO scores are evaluated based on several factors, and are based on historical stock price over multiple periods and taking multiple market environments into consideration. Those securities with a score in the top 15% of the pool are added to PMOM’s holdings.

Despite being a passively managed fund, PMOM rebalances its holdings monthly during periods of high market volatility. If an individual stock’s score falls from the top 35% during any time of the year, it is removed from the fund’s holdings. The fund invests at least 80% of its net assets, currently around $6 million, in its holdings at any given time.

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