Are investors wrong to write off momentum strategies?

clock • 2 min read

Momentum investing strategies have been the subject of much criticism over the years, but new research suggests they can be winners over the long term.

The research, conducted by Elroy Dimson, Paul Marsh and Mike Staunton from the London Business School and published in the Credit Suisse 2015 Yearbook, looks at industry rotation strategies based on past returns (momentum) and value metrics, reaching as far back as 1900. The momentum strategy, which proved the more effective of the two, is based on sorting all existing market industries into the strongest and weakest performers every year. These industries are then divided into quintiles, from the lowest to the highest performers, and the rankings rebalanced every year to reflect retu...

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