After a long period of rising stock markets, the years when investors could calmly let themselves be carried along by the market are undoubtedly behind us. This does not mean that there is nothing to do on the stock market. But we need to look for segments where there is a real dynamic, which can be detected through the trend….
Another question on the minds of many investors, following the strong performances of recent years, is whether technology stocks can continue to generate exceptional profits and continue to be an investor’s El Dorado. Should we still dare to buy NVIDIA, which has risen from $15 to over $220 in less than five years? Or Amazon, which has grown by only 65% over the last five years… but whose share price has risen 26-fold in 20 years..
But analysts don’t always agree with each other. At the beginning of May, Morningstar noted that the AI sector, weighed down by the conflict in the Middle East, was trading at its biggest discount since 2019, while other analysts were more cautious about the ability of hyperscalers to maintain their levels of capital expenditure indefinitely. What to do….
One solution may be to follow the direction of a sector, i.e. to follow the trend, taking refuge in an ETF for example, but which will identify the strongest trends, decide for you by overweighting them, chasing these major trends in the market, without leaving them until it detects any alarm, that this trend is fading, deteriorating..
Avoiding some big mistakes
You have to buy when it’s low and sell when it’s high. That’s the ‘canon’ phrase. Simple? Certainly not. According to the statistics, the opposite is true. Many new investors lose out because all too often they buy high and sell low, overwhelmed by their emotions. In short, the opposite of what needs to be done.
Indeed, if you wait too long, you end up buying at a time that often coincides with the high. Then, the refusal to be wrong pushes the investor to hold on to the stock despite the start of the downturn and the fact that it is not possible, that it will go back up. You can’t go wrong. Then the pressure becomes too great as losses accumulate, and the trader cracks, often selling close to the lows.
One solution would be to try to detect a trend using indicators, and to allow yourself to be carried along and lulled by the upward movement as long as the trend is not contradicted by a few clearly identified key indicators. It’s not always easy to hold on to a share … and not crack when the temptation is to pocket the profits. The statistics are unequivocal. Exploiting stable market trends can pay off handsomely. Just think of NVIDIA or Amazon.
Some ETFs are able to detect and select trends, with the advantage that the investment will not be stopped as long as the trend remains stable. The decision to break away from this trend will only be taken on the basis of well-defined criteria, far removed from emotional considerations.
Using a proprietary quantitative approach, the ODDO BHF Algo Trends US Fund invests in trends, a model that can detect stable market trends.
Using a proprietary quantitative approach, ODDO BHF US Equity Trend invests in US equities. The quantitative model evaluates stocks on the basis of a “smart momentum” strategy, analysing a large amount of historical data in order to detect stable market trends. The portfolio construction process places great emphasis on diversification and risk management by applying various optimisation constraints. Note that this fund invested in equities is exposed to the risk of capital loss.
Karsten Seier, Manager at ODDO BHF Asset Management, gives details of the process: “Our Smart Momentum strategy provides access to the growth potential of US equities, using a disciplined quantitative approach based on the Momentum factor and applied to large- and mid-cap US equities. The focus is on stocks in the S&P 500 index, selected using a quantitative model developed by us”.
There are two stages to the process, explains the manager: “Identification of quality trends: each stock in the investment universe receives a momentum score. Medium- and long-term trend characteristics are assessed to identify stocks that are developing sustainably and more favourably than the market as a whole”.
Next, the portfolio is made up of stocks with the best momentum score. “The emphasis is clearly on diversification and risk management, with various restrictions on sector, style or value concentration, with the aim of keeping up with the best trends,” he concludes.
Stock markets and equities are constantly moving in short- and medium-term trends. And by exploiting the momentum effect in a quantitative approach, we can select the stocks in a sector that best participate in this trend. But the portfolio construction process places great emphasis on diversification.
However, some may be surprised that this trend ETF is geared towards the US market. Quite logical, given that it was in Uncle Sam that the biggest stories began and have continued to exist over the last few decades, such as the new economy, the Internet and now artificial intelligence. The world’s largest market accounts for 63% of global market capitalisation. To convince ourselves, and to continue talking about trends, since its creation in 1957, the S&P 500 has risen by an annual average of 10.3%. Like a trend… but certainly fuelled over the years by sector rotations. It’s also up to the investor to find the right timing.
More specifically, a number of popular shares have been keeping shareholders happy for several years. Should we follow the trend… Like Amazon, whose profit growth confirms that it is constant. A look in the rear-view mirror: in 2015, profits topped the billion-dollar mark for the first time. A top for some… However, profits have continued to rise, practically following an oblique path to reach 85 billion in 2025, except for one accident, the year of the covid in 2022.
It should be noted that the portfolio construction process for this ETF places great importance on diversification and risk management by applying various optimisation constraints.
Performance that adds weight to the model
The figures for the ODDO US Equity Trend fund speak for themselves, with a clear performance over the last 5 years compared with its benchmark, the S& P 500 EUR Net Total Return Index.
Among the sectors in which the fund is invested (data at 30 April), and which are benefiting from positive trends, it is logical to find technology (41% but underweight by 1.4%). In the current overweight positions, retail (10.5% overweight by 2.8%), insurance (2.8% overweight by 1.3%) and construction & materials (2.4% overweight by 1.5%) are favoured, while the gas/oil sector (3% underweight by 0.5%) is somewhat neglected.
Quite logically, the fund’s top 10 weightings include technology stocks (Nvidia, Apple, Broadcom, Amazon, etc.), as well as the retail company Walmart (up 35% over one year) and the lesser-known health sector company Weltower, up more than 40% over one year (as at 18 May 2026). (editor’s note: These values do not constitute investment recommendations).
The fund was launched on 16/07/2018 and an investor who put his foot down on that date by investing €100, while holding on to his investment since then, holds (at [put date?] a sum of more than €276.
It should be noted that in a negative period, that of the covid in 2022, the fund had its only year of underperformance against the S&P 500 EUR Net Total Return Index. Since then, the fund has done better than catch up with its benchmark over the last three full calendar years (2023, 2024, 2025).
A new world (dis)order