The busiest threads on r/ETFs right now are not about VOO. They are about DRAM, a memory-industry ETF that doubled in a year, pulled in a crowd, and is now filling the sub with "who else got burned" posts. Meanwhile Morningstar's 2026 ETF outlook counts more than 1,100 new ETFs launched this year and classifies nearly a third of them as trading tools: leveraged and inverse products built for short-term bets, not investing. There are now roughly 600 such funds listed in the US.
The replies split the usual two ways: "performance chasing, buy VT" versus "you just hate winners". We think both camps are missing the actually useful distinction, because buying DRAM after a 100% run and buying a momentum portfolio look like the same act from the outside. They are opposites.
Chasing and momentum share an entry rule
Let's concede the uncomfortable part first: momentum investing also buys things that already went up. That's the whole factor. A century of data says buying recent winners has been one of the most persistent edges in markets; we backtested a top-decile momentum rule to 1928 in a recent post, and it works across eras that share nothing else.
So the theme-chaser and the momentum investor agree on the entry. Everything that separates them happens after the buy.
Three differences that decide the outcome
First: universe. A momentum rule ranks a fixed, broad universe and holds whatever is strongest, whether that's boring industrials or memory chips. The theme-chaser's universe is whatever Reddit is excited about, which means the selection already happened, done by the crowd, at the top of the attention cycle. New niche ETF launches are a lagging indicator of that attention: issuers create supply where the demand already peaked.
Second: the exit. This is the big one. Every momentum strategy worth the name has a mechanical exit: the asset drops out of the top ranks, or a trend filter breaks, and the rule sells without a meeting. The DRAM crowd has no exit. Read the threads: "I'm in at least till mid 2027", "I hope this pays off". Those are narratives, and narratives don't fire sell orders. The historical damage from momentum-style investing is concentrated in exactly this failure: riding the theme all the way down because the story never officially died.
Third: position sizing. A ranked sleeve inside a diversified rule caps any single theme at its slot weight. The full-port DRAM posts speak for themselves.
The boring conclusion
If the AI hardware theme keeps running, a momentum rule will keep holding it, and won't care that it's fashionable. If it breaks, the rule sells on schedule and moves to whatever is strongest next, and won't care about the sunk cost. That indifference in both directions is the entire difference between a factor and a story.
Most of those 1,100 new tickers will never be needed by anyone running rules: a momentum system built on a handful of broad, liquid funds covers the same ground with 40+ years of history behind it. See how the rules-based versions behave in the strategy catalog, or start with SPMO vs FMTM vs tactical momentum, which covers why the ETF you pick is only half the decision.