6Mon·

MSCI World with or without momentum?

I am trying to organize my portfolio more clearly and combine several ETFs/funds with the same investment focus, as long as taxes are not too high when I sell them. I now have the pure MSCI World ETF $LWCR (+0.25%) and at the same time the MSCI World ETF of roughly the same size with Momentum $XDEM (+0.2%) . Which of the two would you liquidate? The momentum idea is good, but if you only change stocks every 6 months, the momentum may be long gone in between and you are betting on stocks on the decline. Thank you for your help!

12 Comments

Wealth-Accelerator@Wealth-Accelerator

6Mon

In my opinion, the momentum ETFs work less well.
I would save the "normal" one as a core. And if you are interested in momentum, take a look at the two strategies from @Epi and @Krush82. Maybe one of them will appeal to you for a 5-10% satellite.

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ad_absurdum@ad_absurdum

6Mon

@Wealth-Accelerator What is your opinion based on? So purely in terms of the performance of the indices, there is a strong argument in favor of the momentum factor in the MSCI World, which then performs comparably well to an SP500. Or am I missing something?

Here is a comparison of the indices:

https://curvo.eu/backtest/de/vergleiche-indizes/msci-world-vs-msci-world-momentum-vs-sp-500?currency=eur

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Chris@IronEagle

6Mon

@ad_absurdum In the long run, the difference is really extreme. From 2024 to 2025, however, the two no longer have much in common, even if Momentum is still just ahead. Of course, it was probably a good thing to be heavily invested in Mag7s in the past when they were rising rapidly. However, they are no longer rising (or falling, like Microsoft) as strongly as in the past, so there is no longer such a large excess return. Doesn't make the decision any easier.

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Wealth-Accelerator@Wealth-Accelerator

6Mon

@ad_absurdum
If you weight an entire index according to momentum, it has been proven that it performs better than the benchmark index without momentum.
The stumbling block is the transaction costs. With an entire index, a change every 6 months just has a noticeable effect after deducting the costs. However, you no longer have a passive investment approach. The backtest already shows a great outperformance over the total duration. I believe more in a core-satelitte approach with a more aggressive momentum strategy than an overall index.
But this is largely a matter of taste and due to the fact that backtests are impressive, but not exclusively forward-looking.

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Krush82@Krush82

6Mon

@Wealth-Accelerator I see it similarly, for me core/satellite only makes sense if the small satellites can also achieve disproportionately higher potential returns than the core. The "few" percent more return that the MSCI World Momentum has achieved compared to the MSCI World would not be enough for me personally to want to use it as a satellite

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ichmussweg@ichmussweg

6Mon

Aren't you paying unnecessary profits if you simplify now, i.e. sell a position?

In my experience, momentum has at least recently been justified and has clearly outperformed. But it is also likely to underperform in a crash.

https://www.interactivebrokers.com/campus/ibkr-quant-news/momentum-factor-investing-evidence-and-evolution/

I would see momentum as a factor in the portfolio, just as small/value or quality also have their justification.

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Uwe Geller@SchlaubiSchlumpf

5Mon

@ichmussweg Momentum can be left in, in my opinion. It's not a must, but it's not a fundamentally bad idea as long as you don't overdo it. However, you should familiarize yourself with the background of the factors. Otherwise there is a risk of exiting at some point due to several years of underperformance.

If you don't want that, a msci world or ACWI is a good idea.

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Chris@IronEagle

6Mon

Many thanks for the tips on implementing the momentum strategy. However, I wanted to spare my nerves again and try to take out some volatility, even if extreme increases in value can of course be achieved through the leverage effect - but also in the other direction. I will then stick with the "normal" MSCI World or possibly sell both and take the FTSE Allworld.

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Olli@Olli68

6Mon

I would keep the normal MSCI World and sell the Momentum.
I would play momentum with equities or with a corresponding wikifolio. @Krush82 The momentum wikifolio will soon be investable. Would be a good addition to the normal world ETF.

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Krush82@Krush82

6Mon

@Olli68 that would be the S&P 500 Momentum ETF on steroids, so to speak :-)

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market_analyst_rxwez@market_analyst_rxwez

5Mon

According to Andreas Beck, the momentum strategy does not really work (source: https://www.youtube.com/watch?v=YB--TtMcsVE). However, the video also mentions alternatives that are easy to implement with just a few ETFs. For me, this is definitely the better choice for a diversified portfolio.

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fund_navigator_xsbrp@fund_navigator_xsbrp

2Mon

My opinion, always Momentum! Only actively adjusted when needed, like now on highs.

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