Frothy Get Frothier in Record Bet on BlackRock Momentum ETF

(Bloomberg) -- As U.S. stocks roar into the new year, investors are betting the highest fliers will add more fuel to the overheating market.

Over the five days through Friday, investors added $474 million to the iShares Edge MSCI USA Momentum Factor ETF, or MTUM, the largest sum since the funds inception in 2013, data compiled by Bloomberg show. Previously the weekly inflow record was $221 million -- which MTUM had absorbed just the week before.

The BlackRock ETF tracks stocks which performed the best over the past six to 12 months. The vote of confidence comes as U.S. stocks flash overbought signals and strategists warn of excessive euphoria that could soon lead to a correction.

Mega-cap technology shares have clung to their lead while tax-cuts spur banking stocks. MTUM, which is weighted 38 percent toward tech and 20 percent to financials, has gained 5.8 percent so far in 2018, enjoying its best start to the year on record.

At the same time, cheaper stocks have lagged. Investors pulled $1.3 billion from the iShares Russell 1000 Value ETF last week, making it the second least-loved ETF over the period.

To contact the reporter on this story: Dani Burger in London at dburger7@bloomberg.net.

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, Cecile Gutscher

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