It is an actively managed momentum ETF that uses a quantitative model to pick U.S.-listed stocks with strong price momentum indicators and holds them in a concentrated portfolio. Rather than tracking a broad index, it concentrates its exposure on a small number of stocks with high relative strength.

It seeks excess returns from the momentum factor during trending markets, and suits investors who are willing to tolerate the volatility of a concentrated portfolio.

The ETF is actively managed by Empowered Funds.

From the U.S. equity universe, the fund uses a quantitative model to select stocks with high relative strength based on recent price action, and holds a small number of them at weights close to equal weighting. It seeks excess returns from the momentum factor while trends persist, and its defining feature is a narrow number of holdings that gives the portfolio a strong momentum tilt.

• Momentum exposure concentrated in a small number of stocks
• Active management based on a quantitative model

Assets under management (AUM) are $276.6M, and the expense ratio is 0.45% per year.

Because it holds fewer stocks than broad factor ETFs and therefore has a stronger momentum tilt, volatility can be greater when trends reverse.

By the nature of momentum strategies, performance tends to be relatively strong during bullish trends, while volatility tends to widen when trends break down. Because this factor shows large performance differences across time periods, it is more sensible to focus on the consistency of the strategy than on short-term returns.

Momentum factor ETFs tend to attract more fund flows when market risk appetite rises. As a newer, concentrated ETF, its asset base is small compared with broad core ETFs, and liquidity may vary depending on trading conditions.

Its strength is concentrated quantitative momentum exposure, while its weaknesses are the concentration risk that comes with a small number of stocks and volatility around trend reversals.

Within the same momentum factor category, MTUM, SPMO and JMOM shown in the table are large momentum ETFs built from a broader set of stocks, and they tend to offer wider diversification and larger fund sizes than FMTM. To extend exposure to small and mid-sized momentum stocks, you can also consider mid-cap momentum XMMO and small-cap momentum XSMO. The key difference is that FMTM is a concentrated fund with fewer holdings than these alternatives.

Here are the points to review before investing in FMTM. Because it is a momentum-focused active ETF, checking its cost, concentration and volatility characteristics, as well as its suitability for the current trend phase, will help your decision-making.

Concentration in a small number of stocks and the risk of momentum reversals are the main drivers of short-term volatility. When trends break down quickly, drawdowns can be larger than those of broad index ETFs.

This ETF suits investors who want concentrated exposure to the momentum factor during trending periods. If you prefer broader diversification, it is sensible to compare large momentum ETFs such as MTUM and SPMO before choosing.