Vanguard US Multifactor ETF

VFMF

Market cap $375M

VFMF uses a multifactor, rules-based approach targeting value, momentum, and quality, but has underperformed its Russell 3000 benchmark. Despite a reasonable mandate and low fees, VFMF's returns and risk-adjusted performance lag behind passive alternatives like IWV. The fund's portfolio skews toward small-caps and value traps, contributing to volatility and underwhelming risk-adjusted returns.

If you've been an investor for any length of time at all, then you've almost certainly been advised to start (and maybe even finish) with index funds like the Vanguard S&P 500 ETF. This fund is of course simply meant to mirror the performance of the S&P 500.

Factor investing, despite mixed results, remains intriguing. The Vanguard U.S. Multifactor ETF targets value, momentum, and quality to potentially outperform the broader U.S. market. VFMF's rule-based, non-market-cap approach allows dynamic adjustments, offering diversification with a mid-cap tilt and lower valuation metrics compared to the Russell 3000. The fund actively allocates sectors, notably underweighting technology and overweighting financials, which could be advantageous given current market conditions.

Vanguard ETFs are popular investment vehicles, thanks to their low costs and above average performance. Here is a rundown of the fund family's best and worst performers this year.

Vanguard offers factor-based ETFs that have shown outstanding performance compared to unmanaged, index-based comparison ETFs. Factor-based ETFs have now become mainstream investments, with a market share of over 20% globally. Assets under management for factor-based investments have grown significantly, leading many investors to include factor funds in their portfolios.

VFMF is a Vanguard ETF aiming to beat the market by focusing on stocks with strong price performance, superior fundamentals, and cheap prices. Factors used include value, momentum, and quality, with a focus on screening out high volatility stocks. Sector breakdown, portfolio fundamentals, and key stats of top holdings reveal potential risks and uncertainties, warranting a hold rating due to lack of support of information by Vanguard.

Exchange-traded funds (ETFs) have become an increasingly popular investment vehicle in recent years — even more than mutual funds.  This growing popularity is due to the fact that ETFs are typically low-maintenance, have low fees and afford investors exposure to tens, hundreds or even thousands of positions under a single ETF.

Exchange-traded funds (ETFs) have emerged as a favored instrument for investors seeking straightforwardness, outstanding performance, and cost-effectiveness. Vanguard has transformed into a preferred ETF provider, owing to the company's approach that prioritizes the interests of shareholders.

Vanguard U.S. Multifactor ETF is an actively managed fund holding about 500 stocks selected by proprietary factor-based rules. VFMF is better diversified than the benchmark across sectors and holdings, and it shows better aggregate valuation and growth metrics. VFMF has lagged behind the benchmark and larger multifactor ETFs since inception but has performed well relative to peers in the last 12 months.

With so many small and mid-cap ETFs out there, which might be the best to own right now. I'll restrict this analysis to Vanguard ETFs which seem to have a reasonable exchange policy and which offers among the best returns over the long term. My top choices are based on which Vanguard ETF have shown the best returns over the last five years, with the admonition that past returns may not predict the future.