MTUM – iShares Edge MSCI USA Momentum Factor ETF

Good, better and BEST. How do you pick the best ETF?

One of my readers asked me for my opinion about a “dividend” ETF with the ticker MTUM. His source for this fund was an excellent video that you can view using the link at the end of this post. The presenter, Nathan Winklepleck, said that MTUM outperformed the S&P 500 by 181% (using his criteria for the evaluation.) Mr. Winklepleck’s universe for the good, better, and best ETFs were ETFs submitted to him by his readers or those who watched his videos. Therefore, it is helpful to know which ETFs were in his universe for the “Best Dividend ETF’s.”

Good, Better Best ETFs

Nathan Winklepleck’s slide had a duplicate for NOBL. This is from his youtube presentation.

The twelve ETFs in his review were: DGRO, DIA, MTUM, NOBL, PCEF, SCHD, SPHD, SPYD, SPYG, VOO/SPY, and VYM. Of course, the selection of anything that is good, better or best depends on your list of requirements that must be met. Therefore, if  dividend growth is your primary criteria, then the ETF with the best dividend growth is best. If low cost is your primary criteria, that eliminates solutions for the “best.” If current yield is your desire, then 8% is better than 5% which is better than 3%. As Mr. Winklepeck admits, two of his twelve are not dividend-focused. One of them is MTUM. But momentum is a valuable criteria for evaluating any investment.

Momentum Defined

According to Investopedia, “Momentum is the speed or velocity of price changes in a stock, security, or tradable instrument. Momentum shows the rate of change in price movement over a period of time to help investors determine the strength of a trend. Stocks that tend to move with the strength of momentum are called momentum stocks.” Simply said, if the price of Tesla stock is racing upward and Coca-Cola’s price-per-share is going sideways, then Tesla has much better momentum. If you can consistently pick momentum stocks and sell them at their highs, then you can make a lot of money. That is a lot of work, and not every momentum upwards is sustainable.

What about MTUM?

If you look at Mr. Winklepeck’s ETF list for dividend ETFs, you will see some of my favorites: DGRO, SCHD and VYM. DGRO is also one of his favorites. Let’s compare MTUM with DGRO, SCHD and VYM. Dividend income is a key element in my investing model, so MTUM would not normally be a prime candidate for my investment portfolio. Perhaps MTUM should be an ETF for you. Dividends and stock price appreciation are both important for success.

MTUM has a heavy emphasis on Technology and Health Care
MTUM’s 5-Year Return is very good, but is it the BEST?

The following image helps us see the key momentum and dividend results for five different ETFs. I included VOO because it tracks the S&P 500 index. Bear in mind that each of these funds can have a place in your portfolio. Momentum may be good in a booming economy, but it could be an awful choice if the world economy goes into a depression or goes into a long-lasting recession.

MTUM wins “best” on several metrics, but not all.

FTEC versus MTUM

It is possible to get momentum without using MTUM. If momentum is the goal, then another of my favorites, FTEC, may be better than MTUM. Compare the results as shown here:

FTEC wins on momentum because of TECHNOLOGY focus.

Link to Nathan Winklepleck’s video: YOUTUBE

Full Disclosure

We don’t own MTUM and currently don’t have plans to buy either. Cindie and I own more than 1,500 shares of ETF VYM as a more well-rounded investment with dividend growth.


Nathan Winklepleck, CFA, Amazon #1 Best Selling author, portfolio manager. Author of Dividend Growth Machine. I plan to talk more about his ideas and recommendations in the future.