Momentum investing is simple in theory: it is the belief that rising assets will keep going up, while falling assets will keep dropping. In short, buy today's winners and avoid the losers.
The strategy tends to perform well during sustained bull markets and periods of strong, clear market leadership – like the AI-driven rally of the past three years.
But momentum strategies are vulnerable to stretched valuations, as other investors crowd into the trade, and to sharp reversals.
For investors who want to capitalise on the latest trends, Trustnet asked fund selectors to share some of their favourite momentum strategies.
Ernst Knacke, head of research at Shard Capital, first turned to the US small-cap market, picking Polen Capital 5Perspectives U.S. Small Growth, which is managed by Andrew Cupps.
“The strategy targets companies approaching an inflection point in earnings power, combining fundamental analysis with structural themes and technical evidence rather than relying on a single investment lens,” Knacke said.
Cupps has managed the underlying Small Growth strategy since 2000, taking on the UCITS fund since its launch last year.
“The strategy’s proprietary multi-perspective framework searches across themes such as AI, electrification, aerospace and genomics, producing a highly differentiated portfolio, which over time benefits from strong growth and momentum characteristics,” Knacke said.
It is well-suited to being a high-conviction satellite allocation, due to the volatility associated with small-cap growth and momentum-driven strategies.
He suggested pairing Polen Capital 5Perspectives U.S. Small Growth with a large-cap US equity strategy such as Eagle Capital US Equity, which places a greater focus on quality and value.
Meanwhile, Paul Angell, head of investment research at AJ Bell, first suggested iMGP DBi Managed Futures – a sub-fund targeting long-term capital appreciation by implementing a systematic strategy capturing returns available from global momentum trends across equities, bonds, currencies and commodities.
Rather than relying on a star manager to identify opportunities, the fund uses a quantitative process to identify and replicate the positions driving performance within the broader peer group, as represented by the Société Générale CTA Index.
“The portfolio is built around a focused set of highly liquid futures markets, allowing it to move quickly as trends emerge and evolve,” Angell said.
“This gives investors access to one of the purest forms of trend-following investing, where the aim is simply to participate in markets that are rising and profit from those that are falling, regardless of the economic backdrop.”
He added that managed futures strategies have often delivered their strongest results during periods of market stress, when traditional assets struggle, with iMGP DBi Managed Futures able to adapt rapidly to changing market conditions.
Over the past three years to the end of July 2026, the fund has gained 23.4%, with a three-year cumulative volatility of 13.9%.
“It can take both long and short positions as trends develop,” Angell said. “As a result, the fund can bring valuable diversification to a portfolio, offering a source of returns that is driven by market momentum rather than corporate earnings or economic growth, helping improve portfolio resilience across a range of market environments.”
Angell’s second pick is another managed futures strategy: Montlake DUNN WMA, which has been co-managed by Martin Bergin and Roberto Osorio since the fund’s inception in 2011.
Angell described the strategy as “one of the most established and robust implementations of momentum investing available in the managed futures sector”.
It also deploys a systematic process to identify and capture persistent price trends, regardless of market direction.
“Rather than attempting to forecast economic events or company fundamentals, the strategy focuses purely on market behaviour, taking long positions in rising markets and short positions in falling ones,” Angell explained.
“The strategy is designed to capture major market trends while avoiding excessive trading and short-term noise, which has historically resulted in a smoother return profile and lower downside capture than many peers.”
Angell argued this makes it a compelling diversifier alongside an investor’s traditional equity and bond allocations – particularly during periods when conventional assets struggle – given its historically low correlation to stock and bond portfolios.
Montlake DUNN WMA has an ‘A’ rating from Titan Square Mile, with analysts also highlighting its “excellent record” in both protecting investors’ capital in sustained downtrends while also profiting from them.
The analysts added: “Unsurprisingly, sudden and steep reversals in established trends can prove challenging for the fund, [although] the managers have developed enhancements to the strategy aiming to mitigate the impact of such circumstances.”
Finally, Ben Yearsley, director at Fairview Investing, turned to Artemis’ SmartGARP range, noting that it uses momentum as a key part of the assessment and investment process.
Specifically, he chose Artemis SmartGARP Global Emerging Markets, noting that the consideration of momentum “works well in markets where there is less efficiency”.
The fund, which is managed by FE fundinfo Alpha Manager Raheel Altaf, performed strongly in the first half of the year, gaining 29.1%.
“The investment process blends price momentum with earnings revisions as well as growth and value factors,” Yearsley said, noting the fund would serve well as a core emerging market holding in an investor’s portfolio.
The fund has attracted strong investor interest in recent months, as it was added to the FundCalibre Elite Ratings list in April 2026 and was the most bought fund in the IA Global Emerging Markets sector in 2025, drawing $586.4m in net new money while performance added $457.4m.
Performance of the fund vs sector and benchmark over 5yrs
Source: FE Analytics