iQ ETF Momentum Model
The model follows momentum wherever it leads — equities, bonds, commodities, or currencies.
Investment Objective
The iQ ETF Momentum Model casts the widest practical net in the ETF universe — equities, fixed income, commodities, sectors, international markets, thematic strategies, and factor funds — and each quarter identifies the 5 with the strongest momentum and improving capital flows. The premise is simple: money rotates, and the goal is to be in whatever the market is rewarding right now, not what worked last year. Leveraged ETFs are excluded throughout.
Investment Process
The starting universe spans several hundred non-leveraged ETFs across every major asset class and strategy category — U.S. and international equity, fixed income, commodities, real estate, thematic, and factor ETFs — with BIL serving as the cash fallback.
From that universe, two independent factor passes run simultaneously:
Pass 1 — Relative Strength + Money Flow: ETFs are ranked by 9-period relative strength and the top 15 advance. Those 15 are then ranked by 18-period Money Flow Index and the top 5 are selected — identifying ETFs with strong price momentum and capital inflow behind it.
Pass 2 — Price Trend + Earnings Revision: ETFs are ranked by whether their month-end price is above their 12-month moving average — a simple but effective trend filter — and the top 15 advance. Those 15 are then narrowed by 6-month momentum, selecting the top 5.
The 5 holdings are drawn from the 85th percentile and above of the combined output of both passes, with no repeats — meaning the same ETF cannot occupy more than one slot.
Potential Benefits
The breadth of the starting universe is the strategy's most important feature. By drawing from hundreds of ETFs across every major asset class — domestic and international equity, fixed income, commodities, sectors, themes, and factors — the model has no predetermined view on where the market's best opportunities will come from. In a year when energy leads, it will find energy. When fixed income is the only thing working, it can go there. When thematic growth is in favor, those ETFs are eligible too. That flexibility is what makes this a genuine all-weather momentum strategy rather than a sector rotation model with a fixed menu.
The two-pass structure ensures that different dimensions of momentum are captured. Relative strength identifies what has been outperforming on a price basis; money flow confirms that real capital is moving into those ETFs rather than just thin, technically-driven moves. The second pass adds a trend confirmation layer with the short-term moving average crossover, then further refines on earnings revision momentum — connecting price behavior to underlying fundamental direction. Together the two passes reward ETFs that are strong on multiple fronts.
The no-repeat rule is a practical and important constraint. Without it, a single dominant ETF could theoretically consume multiple slots, concentrating the portfolio in a way that defeats the purpose of running two independent passes. By requiring 5 distinct holdings, the model ensures genuine diversification across the best ideas from both ranking processes.
Potential Risks: A momentum-driven ETF model will always be somewhat late to a rotation — by the time relative strength and money flow confirm a new leader, some of the move has already happened. In choppy, directionless markets where leadership changes week to week, the model can generate whipsaw, rotating into ETFs just as their momentum fades. Concentrating in 5 positions also means a sudden reversal in any one holding — a commodity shock, a geopolitical event, or an abrupt sector de-rating — can move the portfolio materially. The breadth of the universe, while a benefit in trending markets, also means the model can end up in thematic or niche ETFs that carry higher volatility and lower liquidity than the core equity and fixed income names.