Vanguard Momentum ETFs Outperform S&P 500 Over Five Years

The Vanguard Group manages two exchange-traded funds, the Vanguard U.S. Momentum Factor ETF (VFMO) and the Vanguard U.S. Multifactor ETF (VFMF), which have outperformed the S&P 500 over the past year, three years, and five years. These funds leverage momentum-driven strategies to achieve higher returns than the broader market index.

VFMO employs a pure momentum strategy based on six-month and 11-month return periods. In contrast, VFMF combines momentum with value, quality, and low volatility factors. Both funds maintain high diversification and low sector concentration, investing significantly in mid- and small-cap stocks, whereas the S&P 500 remains heavily concentrated in mega-cap technology companies.

Year-to-date total returns highlight the performance gap, with VFMO returning 22.6% and VFMF returning 17.9%. During the same period, the S&P 500, tracked by the VOO ETF, reported total returns of 9.9%.