The ASX Momentum Strategy is one of five ASX-based investment strategies, identifying the five strongest-trending stocks from the ASX 100. It has the aim of hitching a ride on their upward movement. The ‘momentum effect’ states that an investor can use the historical price performance of a stock as a guide to its future performance, at least over the short term. The concept of momentum is not new, having been proven to exist in stock prices for many years. On the 15th of each month (or the next trading day), our model ranks the entire list of ASX 100 companies by our proprietary measure of momentum. This uses a combination of share price performances over the past 6 and 12 months. We then hold the top five stocks at equal weighting, before repeating the process each month. The stocks that drop from the top-ranked list are sold and replaced by the new stocks, now within the top-ranked list. As part of the strategy, we have included an absolute momentum threshold, which means that each stock must meet this minimum threshold to make it into our portfolio. If there are not enough stocks that satisfy this criterion, then the portfolio will start to hold cash. This is a significant component of the strategy, as it helps limit losses during market declines.
This strategy generally benefits in markets that are rising, while aiming to avoid underperformance of markets that are falling. It’s therefore suitable for those who are seeking returns that are similar to those of stock markets like the ASX100 or S&P 500, but with a history of superior performance to those markets.
Our momentum strategy looks for companies with the strongest share price growth. Therefore, there is a tendency to hold winning trades while closing losing trades. This means closed trades information doesn’t represent performance. See the performance data in the charts above for a more complete representation of recent performance
*Performance data for the ASX Momentum strategy relies on backtested data prior to 15 May 2016 and live results post that date. **Past performance is no guarantee to future performance. ^Rivkin advise you not to rely solely on back tested data or statistics in order to make any trading decisions. We suggest you contact our relationship managers to arrange access to our live membership site on trial basis. Here you will be able to view all actual historical trading recommendations (and results) provided to clients over the last 20 years which can be used to inform your own assessment of the potential returns based on your individual situation.
With only five stocks in the portfolio, the Momentum strategy provides a high return in a small portfolio drawn from only the largest ASX listed companies.
*Performance data for the ASX Momentum strategy relies on backtested data prior to 15 May 2016 and live results post that date. **Past performance is no guarantee to future performance
|Item||ASX Value||ASX Blue Chips||ASX Momentum||ASX Income||ASX Event||US Momentum||US Value||US Long/Short||FX & Liquid Market|
|Average No. of Trades Per Year||29||19||24||2||10||48||46||36||120|
|% Positive Months||68%||66%||67%||74%||89%||60%||61%||59%||59%|
|Average Monthly Return||1.38%||0.97%||2.12%||0.22%||0.12%||1.59%||1.24%||1.09%||1.02%|
ASX Momentum Trades
|Status||Stock Name||Code||Entry Month||Entry Price||Distributions Paid||Exit Month||Exit Price||Gross Return (%)|
|Closed||Evolution Mining Ltd.||EVN||Feb-19||$3.79||$0.04||Apr-19||$3.50||-6.1%|
|Closed||Goodman Group Stapled Securities||GMG||Feb-19||$12.61||$0.00||Apr-19||$13.04||3.4%|
|Closed||Rio Tinto Ltd.||RIO||Apr-19||$100.89||$0.00||May-19||$96.50||-4.4%|
|Closed||The A2 Milk Company||A2M||Apr-19||$14.05||$0.00||Jun-19||$13.95||-0.7%|
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