Fidelity Momentum Factor ETF: A Balanced Approach to Momentum Investing

The Fidelity Momentum Factor ETF (FDMO) is a disciplined approach to the momentum investment theme, offering a balanced sector allocation and a portfolio anchored in stocks leading the equity market. Its track record has shown that momentum investing can be a reliable strategy for generating returns. FDMO's approach combines broad-based momentum with controlled volatility, making it a suitable choice for investors looking to capitalize on market momentum while managing risk.

The Fidelity Momentum Factor ETF (FDMO) has emerged as a favored choice among investors seeking a disciplined approach to momentum investing. As of July 10, 2025, the ETF tracked the Fidelity U.S. Momentum Factor Index, which employs a rules-based methodology to select stocks with strong price performance, adjusted for volatility. This strategy has proven effective in generating returns while managing risk, making FDMO an attractive option for investors navigating market uncertainties [2].

FDMO's portfolio is anchored in stocks leading the equity market, with a balanced sector allocation. The ETF's top holdings include technology giants like NVIDIA, Microsoft, and Apple, reflecting its significant exposure to the sector, which accounts for 34.9% of the portfolio. This allocation is consistent with the broader market trends, as seen in the Russell 2000 index. Additionally, FDMO's holdings in financial services, consumer discretionary, and healthcare sectors are notable, with a slight bias toward mega caps relative to the Russell 1000 index [2].

The ETF's track record demonstrates the reliability of momentum investing. FDMO's historical earnings growth of 16.2% is nearly double the Russell 1000's 7.5%, driven by stronger EPS growth in consumer discretionary and technology sectors. While the fund's expected growth is roughly the same as the benchmark, its stock selection methodology does not take into account valuation metrics, allowing it to maintain a balanced approach [2].

FDMO's valuation stands at a P/E of 26.8x, which is a 16.6% premium to the Russell 1000's 23.0x. This relatively high valuation is driven by overweight exposure to high-multiple names like Tesla, Axon Enterprise, and Robinhood Markets. However, the ETF's holdings in technology trade at a similar multiple to the benchmark, with underweight positions in names with P/E multiples above 30x [2].

In conclusion, the Fidelity Momentum Factor ETF (FDMO) offers investors a disciplined and balanced approach to momentum investing. With a strong track record and a sector allocation that mirrors market trends, FDMO is well-positioned to capitalize on market momentum while managing risk. Investors should consider FDMO as a viable option for long-term growth, particularly in a positive macroeconomic environment [2].

References:
[1] https://site.financialmodelingprep.com/market-news/invesco-qqq-trust-series-1-etf-purchase-nasdaq-100-recovery
[2] https://seekingalpha.com/article/4801589-fdmo-a-momentum-etf-blending-broad-based-approach-and-controlled-volatility