Momentum Strategies Confront Crowding Risk
Momentum strategies is back on the agenda for portfolio managers as trend persistence, crowding and reversals changes the risk calculus.
Momentum has been rewarded in several markets, but crowded positioning can amplify reversals when leadership changes. Risk controls and liquidity screens are essential.
Momentum can complement other factors, but it should not be treated as a low-risk strategy.
The main risk is sharp reversals and crowded exits. Investors should watch price trends, positioning data and liquidity conditions in the sessions ahead.
This article is provided for information and educational purposes only and does not constitute investment advice. Market conditions can change, and past performance is not a guarantee of future results.