Integrating Momentum Investing into Value Strategy

Imagine you are the lead portfolio manager at a mid-sized equity investment firm specializing in active fundamental strategies. Your firm has focused on value investing but is considering exploring momentum strategies due to recent market fluctuations favoring growth stocks. You have been tasked with developing a comprehensive report that addresses the following:

Part A: Assess the merits and drawbacks of integrating momentum investing into your firm's existing value-oriented strategy. Consider market efficiency, risk management, and potential returns in your analysis.

Part B: Propose a framework for implementing a momentum strategy that aligns with your firm's investment philosophy and existing infrastructure, including considerations for stock selection, risk assessment, and performance measurement. Be specific about quantitative metrics or qualitative factors to be used in each phase.