VFMF: Value And EPS Growth Acceleration Makes Vanguard's Multifactor ETF Appealing (Ratings Upgrade)

Vanguard U.S. Multifactor ETF (VFMF) is upgraded to 'buy' due to discounted valuation and strong earnings acceleration versus the Russell 3000 Index. VFMF's portfolio leans toward smaller value stocks, sacrificing quality and earnings growth but benefiting from the current market environment favoring value. Despite underweighting high-growth tech, VFMF's next-year EPS growth (10.18%) outpaces its three-year CAGR, signaling positive earnings momentum. VFMF is not recommended as a core long-term holding due to weaker quality, but near-term outperformance over IWV is expected.

I last reviewed the Vanguard U.S. Multifactor ETF (VFMF) on November 30, 2023, when I rated it a "sell" after discovering that it did a poor job balancing the momentum, quality, and value factors in its