Consider, for example, the MSCI World Momentum Index, which has averaged annual gains of 10.75% since its inception in 1994 through June 2022, compared with 7.59% for its benchmark over the same period.
Momentum investors act in defiance of the efficient-market hypothesis, which states that asset prices fully reflect all information available to the public. A momentum investor believes that given all the publicly disclosed information, there are still material short-term price moves that can be taken advantage of. Despite some shortcomings, momentum investing has its appeal. Consider, for example, the MSCI World Momentum Index, which has averaged annual gains of 10.75% since its inception in 1994 through June 2022, compared with 7.59% for its benchmark over the same period.