2-ETF Portfolio Outperforms S&P 500 With Lower Volatility

**Why This Lane Matters** This strategy highlights how combining distinct equity factors, momentum and quality, may offer investors a way to potentially enhance risk-adjusted returns relative to a broad market benchmark like the S&P 500. The approach underscores the potential for simpler portfolio construction to achieve performance objectives.

**The Strategy** A 50/50 allocation to the Invesco S&P 500 Momentum ETF (SPMO) and the Invesco S&P 500 Quality ETF (SPHQ) has shown historical outperformance. Over periods examined, this combination generated annualized returns of 14.17% compared to the S&P 500's 11.08%. The strategy also exhibited lower annualized volatility.

**Factor Performance** Momentum stocks, defined by their recent strong price performance, tend to do well in bull markets. Quality stocks, characterized by high profitability and low financial risk, are noted for their resilience during market downturns. Combining these factors aims to leverage the strengths of each, potentially smoothing out returns.

**ETF Details** The Invesco S&P 500 Momentum ETF (SPMO) has an expense ratio of 0.13% and top holdings including Micron Technology (MU), Nvidia (NVDA), and Broadcom (AVGO). The Invesco S&P 500 Quality ETF (SPHQ) has an expense ratio of 0.20% and key holdings such as Microsoft (MA), Visa (V), and Apple (AAPL).

### Money Play * Investors seeking to potentially enhance risk-adjusted returns may consider strategies that combine factor-based ETFs. A 50/50 split between momentum and quality ETFs, such as and, has historically shown to outperform the broad market with reduced volatility. This approach offers a systematic way to capture different market dynamics.

### Tape / Session Read As of the last close, the S&P 500 (^GSPC) was down 0.25%. The Invesco S&P 500 Momentum ETF (SPMO) declined 1.23% and the Invesco S&P 500 Quality ETF (SPHQ) fell 0.51%.

### Related Names ["", "", "$VOO+WL"] ## S&P 500 ETF Analysis & Key Risk Watch — WEEKEND S&P 500 ETF strategy: Weekend outlook on historical performance of factor-based ETFs versus the benchmark, offering insights for U.S. investors.