Vanguard US Momentum Factor ETF

VFMO

Market cap $1.47B

Vanguard US Momentum Factor ETF continues to outperform peers and the S&P 500, delivering a 13% YTD return. I reiterate a "Buy" rating on VFMO, citing attractive valuation (P/E < 20x, PEG 1.36x), robust momentum, and strong technicals. VFMO offers diversified exposure across market caps and sectors, with a modified equal-weight approach limiting concentration risk.

The Vanguard U.S. Momentum Factor ETF is actively managed. It looks for the best performing stocks over recent time periods.

Vanguard U.S. Momentum Factor ETF offers broad diversification across 627 companies of all sizes, emphasizing technology and maintaining low company-specific risk. VFMO has greatly outperformed a mid-cap benchmark and the S&P 500 over the past year, but its long-term performance is average among momentum peers. VFMO stands out for its low top-10 concentration and reasonable valuation relative to the S&P 500.

The Vanguard S&P 500 ETF is a helpful starting point for investors. The Vanguard Growth ETF and Vanguard Value ETF provide better alignment for investment objectives.

Vanguard U.S. Momentum Factor ETF offers active momentum exposure and is best used as a complement to a core Russell 3000 ETF, like IWV. VFMO provides diversification benefits through lower tech concentration, higher exposure to Industrials and small/mid-caps, and a distinct sector allocation versus IWV. Despite similar long-term returns and lower Sharpe ratios, VFMO's active management reduces drawdown risk and correlation during market stress, enhancing risk-adjusted performance.

Vanguard U.S. Momentum Factor ETF continues to outperform peers, with strong returns and a diversified portfolio across market caps and sectors. VFMO maintains a buy rating, supported by positive technical signals, robust momentum, and a favorable seasonal period ahead. Despite a recent market drop, VFMO shows resilience, reasonable valuation, and attractive long-term growth prospects with limited single-stock risk.

Vanguard's deceased founder Jack Bogle routinely slammed other firms for offering more expensive actively managed funds. Now his firm is doing just that.

The Vanguard U.S. Momentum Factor ETF has experienced recent volatility, but remains a buy due to its valuation and emerging relative strength. VFMO's assets under management have grown significantly, and it offers a low expense ratio and attractive PEG ratio despite recent performance issues. The ETF has a diversified portfolio with significant exposure to mid- and small-cap stocks, and a shift towards value stocks is expected.

The Vanguard U.S. Momentum Factor ETF (VFMO -2.90%) narrowly beat the S&P 500 in 2024. But it is already up 6.3% year to date as of Jan. 26, outperforming the S&P 500's 3.7% gain.

VFMO is Vanguard's U.S. Momentum Factor ETF and offers investors diversified exposure to small, mid, and large-cap stocks with strong short- and long-term momentum features. Diversification is often seen as a positive selling point, but in this case, it's hindered returns since its February 13, 2018, launch date. VFMO lagged behind large-cap momentum stocks, represented by SPMO, by 1.28% per year from March 2018 to December 2023 and then underperformed by a massive 28% in 2024.