Virtus Terranova U.S. Quality Momentum ETF (JOET) seeks to track an index that combines quality and momentum factors, selecting U.S. stocks with strong financial metrics and positive price momentum trends. This growth-oriented ETF targets companies demonstrating both fundamental strength and upward price movement acceleration.
How It Works
JOET employs a rules-based approach that screens U.S. stocks for quality metrics like return on equity, debt levels, and earnings stability, then ranks them by price momentum using trailing 3, 6, and 12-month returns. The fund weights holdings based on combined quality-momentum scores, with monthly rebalancing to capture changing momentum trends. Portfolio typically holds 50-100 stocks with higher allocations to companies showing strongest combined factor scores.
Key Features
- Combines quality fundamentals with momentum signals, avoiding value traps that plague pure momentum strategies
- Monthly rebalancing captures momentum shifts faster than quarterly rebalanced competitors in this factor space
- Recently launched in late 2023, offering newer methodology compared to legacy momentum ETFs from major issuers
Risks
- This ETF can lose value when momentum reverses sharply, as high-flying stocks often fall hardest during market corrections, potentially declining 40-50% in bear markets
- Monthly rebalancing creates higher turnover and transaction costs that may drag performance during choppy, directionless market periods
- Growth stock concentration means underperformance during value rallies or when investors rotate toward defensive, dividend-paying stocks during economic uncertainty
Who Should Own This
Best suited as a satellite holding (10-20% of equity allocation) for aggressive growth investors with 3-5 year time horizons and high risk tolerance. Appropriate for tactical allocation during bull market momentum phases. Requires active monitoring due to factor rotation risks and recent inception date limiting performance history.