If You Invest $10,000 in the Vanguard U.S. Momentum Factor ETF (VFMO) Today, Here's What History Says You Could Have in 20 Years
Key Points
The Vanguard U.S. Momentum Factor ETF invests in stocks that are already going up.
It encompasses around 700 of them.
And it has been performing quite well.
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Here's an intriguing exchange-traded fund (ETF) I've recently looked at: the Vanguard U.S. Momentum Factor ETF (NYSEMKT: VFMO).
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The ETF is primarily focused on U.S. stocks -- large, medium-sized, and small ones -- screening that universe for stocks that have been making strong moves recently, expecting them to continue doing so. It's aiming for long-term appreciation.
It recently held nearly 700 stocks, with a 100% turnover rate, meaning that it sells about 100% of its holdings, on average, each year, replacing them with other holdings. So while it aims for long-term growth, its managers are not very patient.
How will your money grow over 20 years in this ETF?
Here's how the ETF has performed, relative to its benchmark index, the Russell 3000, and to the popular market benchmark, the S&P 500 index:
|
Past Year |
Past 3 Years |
Past 5 Years |
|
|---|---|---|---|
|
Vanguard U.S. Momentum Factor ETF |
28.85% |
22.30% |
12.83% |
|
Russell 3000 |
19.60% |
18.76% |
11.82% |
|
S&P 500 |
19.56% |
19.32% |
12.86% |
Source: Vanguard.com, as of July 31, 2026.
Pretty good, right? The Vanguard U.S. Momentum Factor ETF outperformed both benchmarks in nearly every period. If you made a single $10,000 investment in it and it grew at, say, 22% on average, annually, you'd end up with $533,500 after 20 years. But it's not reasonable to expect 22% growth to continue. The stock market has averaged returns closer to 10% over long periods. If this ETF averaged, say, 12%, your $10,000 could become around $96,500 over 20 years. But, of course, it might grow more slowly -- if momentum stocks lose their momentum.
Still, it's an intriguing ETF worth a closer look.
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Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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