A quick housekeeping note: Fidelity’s $100 transaction fee on the SMI 3Fourteen ETFs has been removed. They are free to trade at Fidelity again (they were already free to trade at other brokers).
After struggling last year, the SMI 3Fourteen Full-Cycle Trend ETF (FCTE) has rebounded strongly so far in 2026. This excerpt from an 8/12 Bloomberg interview with Alex Altmann, Barclays Global Head of Equities Tactical Strategies, explains why the type of quality stocks FCTE focuses on have been such strong recent performers, and why Altmann expects that strong performance to continue:
“We’ve obviously seen a massive momentum unwind, and during that same period, [we] saw a significant bid to quality.... [I]f you recall in 2025, high-quality stocks got beaten to death. It was the third-largest drawdown that we saw in that factor over the past 20 years...
“Around about May of this year, we began to observe that quality was looking extremely cheap. To illustrate this point, quality and value — as two sorts of stylistics — should be quite separate to one another. It’s rare that you get to buy quality stocks at a low valuation. Right now, we’re seeing the highest correlation between those two factors, basically ever.
“If you...look at a backtest of that, it’s telling you [that] you want to be buying quality stocks. And that’s exactly what we’ve seen. We’ve seen quality as the best performing factor since May, at the expense mostly of momentum...
“I think it’s going to stick for a while. If you think about it, the peak of fiscal tailwind is behind us. We’ve got a question mark around what’s happening with interest rates. We’ve got a question mark around what the future of the employment is going to look like. We’ve got a question mark around credibility....
“[T]his should be the perfect setup for investors to go to high-quality businesses, especially because you’ve been able to get them at a valuation discount now. So I think this is a theme that’s going to run basically for the rest of the year, and we’re only really in the first innings of it.”
