Vanguard Looks to Growth, Momentum Factor ETFs

Last month, Vanguard, the second-largest U.S. issuer of exchange traded funds, added active ETFs to its stable of low-cost, passive products. The new additions to Vanguard’s suite of ETFs include five single factor funds and a multi-factor offering.

Among the single factor offerings is the Vanguard U.S. Momentum Factor ETF (Cboe: VFMO). VFMO seeks to provide long-term capital appreciation by investing in stocks with strong recent performance.

Investors often link momentum and growth stocks and while there are differences between the two investment factors, ETFs following those factors often have similar sector exposures. Momentum strategies are typically heavily allocated to the consumer discretionary and technology sectors, among others.

“The growth and momentum factors have been outpacing value for a while now, indicating that the Vanguard U.S. Momentum Factor ETF could be one of the new Vanguard ETFs for investors to consider in the near-term,” reports InvestorPlace. “With VFMO, investors should monitor semiconductor stocks, among other industries, because this new Vanguard fund features Micron Technology, Inc. (NASDAQ: MU), Nvidia Corporation (NASDAQ: NVDA) and Texas Instruments Incorporated (NASDAQ: TXN) among its top 10 holdings.”