ETF: put momentum in your portfolio

This week, the focus is on an equity index built around the European stocks with the strongest upward trends, overweighting high-momentum names and underweighting those losing steam, to amplify favorable phases while accepting higher volatility: the MSCI Europe Momentum Index.

What is this index for?

The MSCI Europe Momentum Index (EUR) is built from the MSCI Europe, which groups large and mid-cap stocks from 15 developed European countries (France, Germany, the UK, Spain, Italy, etc.). Its logic is simple: give more weight to stocks whose prices are rising the most sharply. It is a strategy that works very well during bullish phases. When markets fall, it is more debatable, even though MSCI Europe Momentum has not suffered an industrial-scale disaster over the past 14 years, and has outperformed MSCI Europe 11 times out of 14 over that period.

The index aims to capture the so-called momentum strategy: stocks that perform well have a statistical tendency to keep going for a certain time.

Unlike the standard MSCI Europe (weighted solely by market capitalisation), this index:

• overweights stocks with strong momentum,
• underweights those losing momentum,
• maintains sufficient liquidity and seeks to control turnover.

It is therefore a "trend"-oriented version of the European market.

Technical characteristics

As of January 30, 2026, 124 stocks made up the index, versus 403 for MSCI Europe, with the following average characteristics:

• a weight of 0.81% (versus 0.25% in the standard index)
• a dividend yield of 2.38%.
• a P/E multiple of 17.54.
• 3-year annualised volatility of 10% (above MSCI Europe).

Turnover is high (75% over 12 months), which is logical for a strategy based on price momentum.

Top holdings and sector and geographic exposure

The top 10 stocks account for 36.65% of the index. As of January 30, 2026, they include:

• Banco Santander
• Rolls-Royce
• Siemens Energy
• Rheinmetall
• ASML
• BBVA
• Siemens AG
• HSBC
• Iberdrola
• Safran

By sector, the index is heavily skewed:

• Financials: 41.27%
• Industrials: 31.44%
• Utilities: 5.98%

This reflects a strong concentration in the sectors that have been the most dynamic recently.

Geographically:

• UK: 23%
• Germany: 17.79%
• Spain: 16.12%
• France: 11.41%

Short- and medium-term performance

• Since end-1998: +9% annualised for MSCI Europe Momentum versus +5.38% for MSCI Europe.
• Over 10 years: +11.47% per year versus +8.71% for the standard index.
• In 2025: +26.86% versus +19.39% for MSCI Europe.
• In 2026 as of February 26: +8.5% vs. +7% for MSCI Europe.

Momentum outperforms in strongly directional markets. However, during sharp reversals, the strategy can correct abruptly.

It is aimed at investors looking to amplify the trend in the European market, while accepting higher turnover and occasional periods of underperformance.

ETFs tracking this index:

• Amundi MSCI Europe Momentum Factors UCITS ETF (C) - EUR (LU1681041460 / MCEU): this tracker follows MSCI's momentum index closely, with management fees of 0.23%. It is a relatively small ETF (EUR 137.6 million). Replication is indirect, via physically held securities and swaps.
• iShares Edge MSCI Europe Momentum Factor UCITS ETF (C) - EUR (IE00BQN1K786 / IEMO): this ETF also tracks MSCI's momentum index, with management fees of 0.25%. It is larger (EUR 808 million in assets), and therefore more liquid. Replication is physical.