{"id":27379,"date":"2026-08-04T14:18:23","date_gmt":"2026-08-04T09:18:23","guid":{"rendered":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/?p=27379"},"modified":"2026-08-04T14:18:23","modified_gmt":"2026-08-04T09:18:23","slug":"meet-the-magnificent-vanguard-etf-crushing-the-sp-500-in-2026-thanks-to-its-unique-momentum-driven-strategy","status":"publish","type":"post","link":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/?p=27379","title":{"rendered":"Meet the Magnificent Vanguard ETF Crushing the S&#038;P 500 in 2026, Thanks to Its Unique Momentum-Driven Strategy"},"content":{"rendered":"<p><script>\r\n  atOptions = {\r\n    'key' : '644b717812d811d6a1c1fc5b6ccd6fa6',\r\n    'format' : 'iframe',\r\n    'height' : 90,\r\n    'width' : 728,\r\n    'params' : {}\r\n  };\r\n<\/script>\r\n<script src=\"https:\/\/www.highperformanceformat.com\/644b717812d811d6a1c1fc5b6ccd6fa6\/invoke.js\"><\/script>\r\n<br \/>\n<\/p>\n<div id=\"article-body\">\n<p>The world&#8217;s best investors often succeed because they let their winning stocks run while quickly cutting their losers. In fact, top fund managers including Paul Tudor Jones, Peter Lynch, and Ed Seykota cite this approach as a core part of their respective strategies. <\/p>\n<p>The <strong>Vanguard U.S. Momentum Factor ETF<\/strong> <span class=\"ticker-mention inline-flex items-center font-bold\" data-id=\"339906\">(<a href=\"https:\/\/www.fool.com\/quote\/nysemkt\/vfmo\/\" class=\"font-bold hover:underline\">VFMO<\/a> <span class=\"ml-1 text-green-900\">+1.33%<\/span>)<\/span> is an exchange-traded fund (ETF) that exclusively invests in winners. It uses a mathematical model to identify stocks with upward momentum, placing a higher emphasis on those showing sustained returns over the past 12 months of trading.<\/p>\n<p>The ETF is up 17% so far in 2026, crushing the <strong>S&amp;P 500<\/strong> <span class=\"ticker-mention inline-flex items-center font-bold\" data-id=\"220472\">(<a href=\"https:\/\/www.fool.com\/quote\/snpindex\/^gspc\/\" class=\"font-bold hover:underline\">^GSPC<\/a> <span class=\"ml-1 text-green-900\">+1.48%<\/span>)<\/span> index, which is sitting on a gain of just 9.4%. But its recent outperformance isn&#8217;t a one-off, because the fund has beaten the market on average every year since it launched in 2018.<\/p>\n<p>In other words, its strategy appears to be working, and here&#8217;s why it might be a great buy for the long term.<\/p>\n<div class=\"image\"><img alt=\"A pot plant carved in the shape of an upward-trending arrow.\" fetchpriority=\"high\" width=\"880\" height=\"587\" decoding=\"async\" data-nimg=\"1\" class=\"h-auto max-w-full rounded object-contain\" style=\"color:transparent\" sizes=\"(max-width: 768px) 100vw, 880px\" srcset=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=320&amp;op=resize 320w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=384&amp;op=resize 384w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=640&amp;op=resize 640w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=750&amp;op=resize 750w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=828&amp;op=resize 828w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=1080&amp;op=resize 1080w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=1200&amp;op=resize 1200w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=1920&amp;op=resize 1920w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=2048&amp;op=resize 2048w, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=3840&amp;op=resize 3840w\" src=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&amp;w=3840&amp;op=resize\"\/><\/p>\n<p class=\"caption\">Image source: Getty Images.<\/p>\n<\/div>\n<h2 class=\"my-6 text-2xl font-bold\">Hundreds of winners packed into one ETF<\/h2>\n<p>The mathematical models behind the Vanguard U.S. Momentum Factor ETF select stocks by assessing their 12-month performance, but they also look closely at the last six months to ensure the <a href=\"https:\/\/www.fool.com\/investing\/stock-market\/types-of-stocks\/momentum-stocks\/\" class=\"text-cyan-900 hover:text-cyan-800\">trend<\/a> remains intact. Vanguard&#8217;s models also run calculations to make sure a stock is rising based on its own fundamentals, not because the broader market is trending higher.<\/p>\n<p>The ETF was holding 670 stocks from across nine different economic sectors as of July 31, and the following five sectors had the highest weightings: <\/p>\n<ol>\n<li>Technology: 25.6%<\/li>\n<li>Industrials: 19.7%<\/li>\n<li>Healthcare: 18.3%<\/li>\n<li>Energy: 12.8%<\/li>\n<li>Consumer discretionary: 7.5%<\/li>\n<\/ol>\n<p><strong>Applied Materials<\/strong>, <strong>Sandisk<\/strong>, and<strong> Advanced Micro Devices<\/strong> are the top three individual holdings in the Vanguard ETF, and all of them are from the technology sector. It&#8217;s no surprise given their respective 12-month returns of 182%, 2,840%, and 177%, fueled by soaring demand for data center chips and components from the <a href=\"https:\/\/www.fool.com\/investing\/stock-market\/market-sectors\/information-technology\/ai-stocks\/\" class=\"text-cyan-900 hover:text-cyan-800\">artificial intelligence<\/a> (AI) industry. <\/p>\n<p>Industrial companies have also experienced a surge in demand from the AI industry, as data center operators frantically seek electricity solutions to power their infrastructure. This trend is benefiting <strong>GE Vernova <\/strong>and <strong>Caterpillar<\/strong>, which are among the top 20 holdings in the ETF.<\/p>\n<p>But the stocks at the top of this ETF today might not be there for long, because it has a very high turnover rate of 99.9%. That means the fund can be expected to replace almost every holding in its portfolio over the course of a year, which proves momentum is often fleeting. If there&#8217;s a stock that soars higher for multiple years in a row, investors can be sure it will be in this fund, but that&#8217;s quite rare.<\/p>\n<p>Not even <a href=\"https:\/\/www.fool.com\/investing\/how-to-invest\/stocks\/what-does-nvidia-own\/\" class=\"text-cyan-900 hover:text-cyan-800\"><strong>Nvidia<\/strong><\/a> has maintained its place in the ETF, because it&#8217;s underperforming the S&amp;P 500 this year. <\/p>\n<h2 class=\"my-6 text-2xl font-bold\">History suggests the Vanguard ETF can continue beating the market<\/h2>\n<p>The Vanguard U.S. Momentum Factor ETF has delivered a compound annual return of 14.8% since it launched in 2018, beating the <a href=\"https:\/\/www.fool.com\/investing\/stock-market\/indexes\/sp-500\/\" class=\"text-cyan-900 hover:text-cyan-800\">S&amp;P 500<\/a>, which returned an average of 14.1% per year over the same period. <\/p>\n<section class=\"shadow-card mb-[40px] border border-gray-300\">\n<div class=\"flex flex-wrap place-content-between\">\n<div class=\"flex w-full place-items-center lg:w-3\/4\">\n<div class=\"py-4 pr-4\"><img alt=\"Vanguard Wellington Fund - Vanguard U.s. Momentum Factor ETF Stock Quote\" loading=\"lazy\" width=\"64\" height=\"64\" decoding=\"async\" data-nimg=\"1\" class=\"w-full flex-none object-contain\" style=\"color:transparent\" srcset=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Fart%2Fcompanylogos%2Fmark%2FVFMO.png&amp;w=64&amp;op=resize 1x, https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Fart%2Fcompanylogos%2Fmark%2FVFMO.png&amp;w=128&amp;op=resize 2x\" src=\"https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Fart%2Fcompanylogos%2Fmark%2FVFMO.png&amp;w=128&amp;op=resize\"\/><\/div>\n<div class=\"pr-[16px]\">\n<p>Vanguard Wellington Fund &#8211; Vanguard U.s. Momentum Factor ETF<\/p>\n<\/div>\n<\/div>\n<div class=\"flex w-full place-items-center lg:w-1\/4\">\n<div class=\"h-full w-5\/6 px-4 py-2.5 lg:text-right bg-green-200\">\n<p>Today&#8217;s Change<\/p>\n<p>(<!-- -->1.33<!-- -->%) $<!-- -->2.97<\/p>\n<p>Current Price<\/p>\n<p>$<!-- -->226.69<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"flex flex-wrap transition-all duration-300 h-0 overflow-hidden\">\n<div class=\"w-full p-2 lg:w-1\/4 lg:p-4\">\n<h3 class=\"text-gray-1100 text-md my-3 leading-snug font-bold uppercase\">Key Data Points<\/h3>\n<div class=\"text-gray-1100 grid grid-cols-2 text-sm [&amp;&gt;*:nth-last-child(-n+2)]:border-b-0\">\n<p>AUM<\/p>\n<p>$2.0B<\/p>\n<p>Dividend Yield<\/p>\n<p>0.62%<\/p>\n<p>Expense Ratio<\/p>\n<p>0.13%<\/p>\n<\/div>\n<div class=\"text-gray-1100 grid grid-cols-2 text-sm [&amp;&gt;*:nth-last-child(-n+2)]:border-b-0\">\n<p>Top Holdings<\/p>\n<p>KLAC<\/p>\n<p>1.24%<\/p>\n<p>AMAT<\/p>\n<p>1.22%<\/p>\n<p>MU<\/p>\n<p>1.22%<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<p>There have been a few severe market downturns since then, caused by the COVID-19 pandemic in 2020, the inflation surge in 2022, and the Trump administration&#8217;s sweeping tariffs in 2025, yet this ETF has still come out ahead of the S&amp;P 500. That suggests its momentum-driven strategy, which also involves cutting losers when momentum turns, is working, so there&#8217;s a good chance it will continue beating the market over the long term.<\/p>\n<p>And it should continue working no matter what industry the best-performing stocks are coming from. AI stocks might be driving the market higher today, but the ETF&#8217;s mathematical models will identify any potential change in leadership and rotate its holdings accordingly.<\/p>\n<p>One downside to this ETF might be its cost. Its expense ratio of 0.13% translates to an annual fee of $13 for every $10,000 invested, which isn&#8217;t much at face value, but it&#8217;s four times as costly to hold as many of <a href=\"https:\/\/www.fool.com\/investing\/how-to-invest\/etfs\/how-to-invest-in-voo-etf\/\" class=\"text-cyan-900 hover:text-cyan-800\">Vanguard&#8217;s passive index funds<\/a>, which have expense ratios of just 0.03%. <\/p>\n<\/div>\n<script async=\"async\" data-cfasync=\"false\" src=\"https:\/\/pl30214220.effectivecpmnetwork.com\/9ab3d4df8a7e1a6171e16ddbf732cc19\/invoke.js\"><\/script>\r\n<div id=\"container-9ab3d4df8a7e1a6171e16ddbf732cc19\"><\/div>\r\n\n","protected":false},"excerpt":{"rendered":"<p>The world&#8217;s best investors often succeed because they let their winning stocks run while quickly cutting their losers. In fact, top fund managers including Paul Tudor Jones, Peter Lynch, and Ed Seykota cite this approach as a core part of their respective strategies. The Vanguard U.S. Momentum Factor ETF (VFMO +1.33%) is an exchange-traded fund&#8230;<\/p>\n","protected":false},"author":1,"featured_media":27380,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/g.foolcdn.com\/image\/?url=https%3A%2F%2Fg.foolcdn.com%2Feditorial%2Fimages%2F881776%2Fa-pot-plant-carved-in-the-shape-of-an-upward-trending-arrow.jpg&w=1200&op=resize","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-27379","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-trending-viral-news"],"brizy_media":[],"_links":{"self":[{"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/posts\/27379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27379"}],"version-history":[{"count":0,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/posts\/27379\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=\/wp\/v2\/media\/27380"}],"wp:attachment":[{"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usnews-14267fa.ingress-comporellon.ewp.live\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}