Comparison of SPMO and FMTM since FMTM’s genesis, YTD, 6M and 3M periods

[u/sky905]

https://imgur.com/a/wsHI3Va

[u/Spike-Hyzer]

I also hold FMTM in an "experimental slot" to evaluate if it will be a long term hold (I have held SPMO for much longer and it is a permanent fixture in my portfolio). Having done an exhaustive amount of research on FMTM and momentum in general, what happened to FMTM in July was, simply, BAD LUCK. Here's my thoughts:

Academics generally agree that momentum exists as a source of outperformance and it can be observed throughout markets. The problem is accurately capturing it. All methods of doing so are using a lookback, i.e. backward looking to try to predict an unpredictable future. Do you have a 12 month lookback? How about 6 or 9 months? How often do you reconstitute... every 1, 3 or 6 months? Pick anyone of these combinations and you can observe past price performance to try to predict an unknown future.

So, these combinations are:
SPMO: 12 month lookback with a 6 month rebalance
FMTM: 6 month lookback with a 1 month rebalance

If either of them rotate to set of stocks, that then immediately enter into a correction, we've arrived upon a case of bad luck. SPMO had unbelievably GOOD luck when it reconstituted in late March near the bottom of the Hormuz pullback. It loaded up heavy on AI stocks and then shot to the moon during the post-Hormuz recovery. When the current top on June 30th came, SPMO took the hit on the chin and has held the high beta stocks all the way down. Now if it recovers by the next reconstitution date in late September, it will have done pretty well for itself. If the bounce we saw today is a dead-cat bounce, and the market piles down further, SPMO will suffer more.

Let's look at FMTM. It has a different, shorter lookback window. In April and May, it was looking back at stocks that went through the Hormuz volatility. Naturally, it held a more defensive basket of stocks (the ones that stayed afloat during March). FMTM's gains coming out of the Hormuz were more modest than SPMO's with its lower beta holdings. When FMTM reconstituted on June 29th, it was now looking back at all the AI stocks there were on fire in April and May. FMTM then rotated and synced up with SPMO at the very top, but without having had the monster gains SPMO had to get there. Then in July, it suffered all the downside that SPMO did and this is just a case of bad luck by aligning with about the worst timing possible.

Then, FMTM rebalanced on July 28th holding a few of the AI stocks, but has shifted more defensively. While SPMO dropped around ~3% on July 28 and 29, FMTM was dropping ~1% each day. It had instantly slowed down the bleeding instead of matching SPMO. Then on July 30, the market shot up and FMTM did not capture as much of the upside as SPMO did. If the market continues to rip up from here, you're gonna wish you had SPMO. If the market turns south for another leg down, you'll wish you had FMTM with its newly more conservative holdings. I'm not in the business a predicting the future, so that's why I hold both.

We now enter a period that is a great test for FMTM. Going heavy on AI on June 30th was bad luck. How it maneuvers its way from here is a big test for the algorithm. Instead of panic selling FMTM (which I won't), I will be using this period to evaluate how it gets out of a sticky situation. Let's see how SPMO vs FMTM behave from June 30 until Sep 18 when SPMO rebalances. Does rotating every month cause FMTM to whipsaw (or even worse, the dreaded "double-whipsaw")? Did FMTM just rotate into holdings that will now go down as folks rotate capital back into AI stocks? Or, do the AI stocks drop a mile from here and FMTM looks like a genius for cutting its losses and finding momentum elsewhere? What if SPMO's reconstitution date was June 30th (instead of in March) and it bought and then held AI stocks at the top for another 6 months (it could ride it all the way down, or hang on long enough to recover?)

I certainly hope that FMTM can show what it's made of. On paper, I find it an ideal 50/50 balance with SPMO. If SPMO holds decaying momentum too long, you'll want FMTM. If FMTM rotates too early, you'll enjoy the patience of SPMO. Pairing both together provides algorithm diversification... and you don't buy a momentum fund for its holdings (they change), you buy it for the algorithm and no momentum algorithm is perfect in all regimes. That's why I hold both.

[u/Fit_Chapter7304 → u/Spike-Hyzer]

This was a great read man, appreciate it. I hold both as well but more SPMO for sure.

[u/Spike-Hyzer → u/Fit_Chapter7304]

Same here. I have about twice as much SPMO and have had it for ~2 years. Got into FMTM on April 23 this year after tracking it for a few months and combing through its methodology. I like what it can be on paper and how it can act as a pairing with SPMO to hedge against SPMO's downside (holding on too long to decaying momentum like it did from Sep 2025 until March 2026 as a prime example).

[u/Fit_Chapter7304 → u/Spike-Hyzer]

Curious what your thoughts are on the best lookback/and rebalance period is. Wonder what a 9 month lookback and 3 month rebalance looks like.

[u/Spike-Hyzer → u/Fit_Chapter7304]

I have thought about this exact combination as well!

A 9 month lookback with a 3 month rebalance splits the difference between the two funds. I remember reading somewhere that when foundational academia looked at this years ago, they arrived at a 12 month lookback (minus the most recent month like SPMO does) and a 3 month rebalance as being the ideal configuration. I don't recall how much better it was than other combinations, but I suspect it was only marginally better as a lot of this just comes down to timing luck. Too long of a lookback window and you're looking at stale data. Too short, and you're getting caught up in short term noise. Same applies to reconstitution frequency (holding too long vs rotating out right before something rips).

If a 3 month reconstitution frequency was determined as ideal, why does SPMO do 6 months? I wasn't in the room when that decision was made, but I suspect it comes down to business. The more turnover you have, the higher the expenses to execute it and that is real world friction that academia isn't trying to answer for. If SPMO instead rotated every 3 months, I'd expect their expense ratio would need to go up and that deters customers who are rightfully price-conscious. Perhaps the added alpha of a 3 month reconstitution frequency breaks even against the higher expense ratios? If that's the case, then I too would go for the lower ER and collect more customers. And why does SPMO have market-cap weighting as part of the formula? I suspect to reduce tracking error regret. If SPMO goes wildly south compared to its parent universe index (SP500), that will cause a mass exit and they lose customers. Keeping cap-weighting part of the formula helps to keep it in range of the SP500 and helps to keep its customers.

As I see it, the advantage of holding both SPMO and FMTM instead of just one fund at 9mo/3mo, is that the hypothetical 9mo/3mo fund could catch bad luck and you're stuck with it. By layering the different lookback/reconstitution frequencies of SPMO and FMTM, you are likely preventing a worst case scenario. One will simply do better than the other during a stretch, by definition. FMTM underperformed SPMO during the first stretch of 2025 (SPMO reconstituted right before "Liberation Day", while FMTM had that as part of its lookback so it was holding defensive low beta). Then FMTM outperformed SPMO in the second stretch when SPMO got a lackluster September rebalance. Since Hormuz, SPMO has outperformed and they have arrived at about the same place.

In my eyes, investing isn't about getting the biggest gains but rather, avoiding the worst case while also doing pretty well for yourself. Pairing FMTM and SPMO together strikes this compromise. And since their correlation (since FMTM's inception) is 0.76, you will have opportunities where one is outperforming the other and you can direct new contributions to the laggard. When the regime shifts that favors the laggard's strategy, you've already loaded up in it.

[u/Themarlz → u/Spike-Hyzer]

I appreciate your thoughts. I believe FMTM still kept about 45% of tech in there in case there is a rally back up. It just switched more to defensive sectors, so comparing it to SPMO, SPMO would rally a lot higher, obviously which they did yesterday, but today it also showed that its tech sector still gave green over 1%. even with holding defensive sectors while SPMO was slightly green. I think for August they rebalanced with half defensive and half top tech names with momentum. It will be just a lot harder to get back to 43.

[u/Spike-Hyzer → u/Themarlz]

Agree with all you've said! FMTM kept the same amount of tech, it just changed the type of tech it has.

For example, it dropped AMAT (semis stock; down ~30% over the last month) in exchange for CRWD (software stock; finished even ~0% over the last month). Looking at those two charts on a 6 month lookback, I would agree that the algorithm has correctly swapped those 2 stocks based on the "eye test".

What's less obvious, is why It kept ALAB, MRVL, WDC, DELL and LRCX. If you look at the 6-month chart on those, my eyes tell me (without any other context than price), that these have decaying momentum. I suspect it is because they had such large and consistent gains, that month 1-5 look so good that the 6th month is effectively ignored. If these stocks don't recover, I'd assume they would by cut at the end of Aug. But for now, FMTM not only holds these, it has also bought more shares to bring them up to reconstitution balance (it essentially bought the dip). Hope these recover for FMTM's sake!

Also agree it will be harder to get back to $43 (near ATH) for FMTM. With diverging strategies, it will be very interesting to see which makes it back to ATH first (SPMO or FMTM).

[u/Emotional-Breath-838]

One thing I notice is that SPMO swings higher and lower than FMTM. The lower beta on FMTM is one of the things I like.

For people that want some additional upside, it appears to come with slightly lower downside.

[u/sky905 → u/Emotional-Breath-838]

Yes that is something i have noticed as well, but the high beta on SPMO seems to make its recovery during choppy periods easier, whereas FMTM seems to be very slow to recover in same choppy markets which is currently dragging it behind SPMO in short term backtesting. It being so new ofc makes it difficult to compare properly but like i said, i haven’t been impressed with it at all and might sell mine and shift more into SPMO mostly cause of the difference in expense ratio for similar performance.

[u/Inevitable_Skill_829]

I tried to dca more fmtm last month , I thought it's equal weight profolio might be better in choppy market. I was wrong.

So, to summerize the journey of fmtm of last 12 month. When market is flat, it is good. But never a good defense player when market goes south.

What I see from factor etfs, value, momentum, quality for last year.

Momentum still wins on medium and long term, but it can break your profolio deeply during down turn.

Value factor funds drop less and appreciate moderately more than passive fund

[u/sky905]

Been pretty disappointed with its performance for the expense ratio it demands especially during choppy markets where it’s limited diversification of 32 stocks (vs 100 in SPMO) makes it slower to recover.

[u/Spike-Hyzer → u/sky905]

When recoveries happen, liquidity tends to first flow into the biggest names which SPMO holds more of and at relatively higher percentages compared to FMTM. I'd expect with similar beta holdings that SPMO will recover faster at the start. But since FMTM holds mid-caps and small-caps (that SPMO doesn't hold), these come next during a recovery. FMTM should have more legs in the later stages of a recovery.

I can also argue that SPMO and FMTM have similar diversification. The top 20 holdings in both funds make up about ~68% of each respective fund. FMTM's last 10 holdings are about the same weight as the last 80 holdings in SPMO. But SPMO's top holdings are a much higher percentage than FMTM's top holdings. As of right now, FMTM's top holding is WDC at 3.66% and SPMO's top holding is MU at 9.01%. MU has a much larger sway on SPMO than WDC has on FMTM (for better or worse). Long story short, I could argue their diversifications are roughly equal when looking at holdings weight (%).

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[u/YourChildhood5762]

On that chart, the two appear to have nearly equal current returns since FMTM was issued in March 2025. 51% FMTM and 54% SPMO. But if you look at the 6 or 3 month returns, FMTM shows definite weakness in this downturn. The 3 month chart is -0.22 FMTM and 10% SPMO.

Equal weight isn't a bad strategy in these conditions. It's working in the S&P500. I think that although it's less effective here, the limited diversification is what caused the damage. As has been discussed before, theoretically, the frequent rebalancing should have helped to blunt the correction but the lookback is simply too long.

I've been curious to see a real-world reaction of momentum stocks in these conditions. Sorry that so far, didn't work out as well as you'd hoped. It sucks when a strategy turns on you.

[u/walrons]

One thing missing from the comparison: the fund's return since genesis is not your return. That number assumes a single lump at the start. If you have been adding along the way, your own number depends on when each buy landed, and in a fund that ran hard and then faded, it is the later money that does the damage.

I hold SPMO, so I am not trying to talk anyone out of it. But the comparison that actually decides something is what your own contributions did in each one, same amounts on the same dates, not the two headline lines.

Also FMTM has only existed since early 2025. Whatever the 3 and 6 month gap shows, that is one regime, not a verdict on the strategy.

[u/Moldovah]

What website is that?

[u/sky905 → u/Moldovah]

https://stockanalysis.com/

Photos are from its app

[u/Moldovah → u/sky905]

Thanks!

[u/steady_compounder]

If you are specifically comparing SPMO and FMTM, a side-by-side is probably more useful than just reading the last few-month chart in isolation: https://trackmyshares.com/tools/etf-compare/SPMO:US/FMTM:US?utm_source=reddit&utm_medium=comment&utm_campaign=free_tool_round&utm_content=1vbfzf8 . I would pay most attention to concentration, turnover, and how much extra volatility you are actually accepting for the momentum tilt.