Key Takeaways
- • Momentum investing capitalizes on the tendency of rising assets to continue appreciating, a strategy that has performed strongly during the AI-driven bull market of the past three years but remains vulnerable to valuation stretches and sharp reversals.
- • Ernst Knacke, head of research at Shard Capital, recommends Polen Capital 5Perspectives U.S. Small Growth, managed by Andrew Cupps since its UCITS launch last year, as a high-conviction satellite allocation targeting companies at earnings inflection points across themes including AI, electrification, aerospace, and genomics.
- • The Polen Capital strategy employs a proprietary multi-perspective framework combining fundamental analysis with structural themes and technical evidence, differentiated from single-lens momentum approaches and suited to volatile small-cap growth allocations.
- • Knacke suggests pairing Polen Capital 5Perspectives U.S. Small Growth with a complementary large-cap strategy such as Eagle Capital US Equity to balance volatility with quality and value exposure, creating a diversified momentum-driven portfolio structure.
Summary
Momentum investing—the straightforward premise that rising assets will continue appreciating while falling assets will continue declining—has emerged as a focal point for institutional investors seeking to capitalize on sustained market trends. The strategy has demonstrated particular strength during the AI-driven rally spanning the past three years, where clear market leadership and sustained bull conditions have rewarded investors who positioned themselves in momentum-oriented holdings.
Trustnet surveyed fund selectors to identify optimal momentum strategies for investors seeking current market exposure. Ernst Knacke, head of research at Shard Capital, highlighted Polen Capital 5Perspectives U.S. Small Growth as a primary vehicle for momentum-focused allocations. The strategy, managed by Andrew Cupps—who has overseen the underlying Small Growth strategy since 2000—launched as a UCITS fund last year and targets companies approaching inflection points in earnings power. Its proprietary multi-perspective framework integrates fundamental analysis with structural thematic exposure and technical evidence, differentiating it from single-dimension momentum approaches.
The fund's portfolio construction spans thematic opportunities including artificial intelligence, electrification, aerospace, and genomics, generating a highly differentiated holdings structure that benefits from growth and momentum characteristics over time. According to Knacke's assessment, the strategy is well-positioned as a high-conviction satellite allocation given the inherent volatility associated with small-cap growth and momentum-driven vehicles.
To address concentration risk, Knacke recommends pairing Polen Capital 5Perspectives U.S. Small Growth with a complementary large-cap US equity strategy such as Eagle Capital US Equity, which emphasizes quality and value rather than pure momentum exposure. This combination approach balances the growth-oriented momentum characteristics of small-cap positioning with the stability and valuation discipline of large-cap quality-focused holdings.
Momentum strategies, however, carry material risks. Crowded trades and stretched valuations can precede sharp reversals, requiring investors to maintain disciplined position sizing and diversification. The strategy's strength during clear bull markets inversely implies vulnerability during periods of unclear leadership or rapid sentiment shifts.
Trustnet surveyed fund selectors to identify optimal momentum strategies for investors seeking current market exposure. Ernst Knacke, head of research at Shard Capital, highlighted Polen Capital 5Perspectives U.S. Small Growth as a primary vehicle for momentum-focused allocations. The strategy, managed by Andrew Cupps—who has overseen the underlying Small Growth strategy since 2000—launched as a UCITS fund last year and targets companies approaching inflection points in earnings power. Its proprietary multi-perspective framework integrates fundamental analysis with structural thematic exposure and technical evidence, differentiating it from single-dimension momentum approaches.
The fund's portfolio construction spans thematic opportunities including artificial intelligence, electrification, aerospace, and genomics, generating a highly differentiated holdings structure that benefits from growth and momentum characteristics over time. According to Knacke's assessment, the strategy is well-positioned as a high-conviction satellite allocation given the inherent volatility associated with small-cap growth and momentum-driven vehicles.
To address concentration risk, Knacke recommends pairing Polen Capital 5Perspectives U.S. Small Growth with a complementary large-cap US equity strategy such as Eagle Capital US Equity, which emphasizes quality and value rather than pure momentum exposure. This combination approach balances the growth-oriented momentum characteristics of small-cap positioning with the stability and valuation discipline of large-cap quality-focused holdings.
Momentum strategies, however, carry material risks. Crowded trades and stretched valuations can precede sharp reversals, requiring investors to maintain disciplined position sizing and diversification. The strategy's strength during clear bull markets inversely implies vulnerability during periods of unclear leadership or rapid sentiment shifts.
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