ETF Momentum Strategy: Why Monthly Rebalancing Matters When Market Trends Start To Change

Momentum investing can deliver strong returns, but there is always a risk that a high-performing ETF may lose its momentum. A portfolio approach can help manage this risk by spreading exposure across multiple ETFs instead of relying on a single winner. Prashant Shah, Founder & CEO, Definedge Securities, explains how a momentum-based ETF portfolio can be rebalanced every month, allowing weaker-performing ETFs to exit while stronger ones enter. The strategy focuses on following market momentum rather than predicting which ETF will outperform next. Regular rebalancing can therefore help investors adapt as leadership shifts across sectors, indices and asset classes.