The momentum trade has taken a painful hit in recent weeks, but Morgan Stanley believes the worst may be over. This view could put momentum-focused ETFs back on investors’ radar.
Michael Wilson, the bank’s chief U.S. equity strategist, said one of the “worst momentum selloffs in history” is giving way to a healthier market environment where leadership is rotating away from semiconductor stocks and toward companies with stable earnings, stronger margins and better operational efficiency. Rather than signaling the end of the momentum factor, Wilson argues the selloff represents a reset as investors shift to a new group of market leaders.
