This Overlooked Vanguard ETF Could Be the Smartest Place to Park Your Money Right Now
2026-09-30 18:23
•Dave Kovaleski •The Motley Fool
•• •••• Axe Cap view
Why South African Investors Should Notice Vanguard’s Multifactor ETF
VFMF’s smart mix of value, momentum, and quality stocks makes it a good hedge against global volatility that can affect the rand and local markets.
The Vanguard U.S. Multifactor ETF (VFMF) is quietly beating many broad market funds by focusing on stocks that are both quality and undervalued with upward momentum. At a time when U.S. large caps are expensive and interest rates are on the rise, this approach can help reduce downside risk. For South African investors, the relevance lies in the USD/ZAR exchange rate. A weaker rand often follows global market uncertainty, impacting local importers and earnings from offshore exposure, including big names like Naspers and MTN. VFMF’s disciplined method could serve as a hedge against potential turbulence while offering superior returns. That said, if the U.S. market sees a strong growth restart, high-flyers outside the value/momentum style may outperform, leaving VFMF trailing. Still, given the current environment, it’s worth watching closely. this is just our opinion and not financial advice
Consider adding a modest position in VFMF via offshore exposure to balance rand-sensitive portfolios. Meanwhile, hold SA financials like Standard Bank and FirstRand steady due to their rate sensitivity and local market footprint.
- VFMF
- USD/ZAR
- Standard Bank
- FirstRand
- U.S. growth outperforms, favoring growth stocks over value
- Rand strengthens, reducing offshore earnings impact for JSE-listed multinationals
6/10
The Vanguard U.S. Multifactor ETF (VFMF) is highlighted as an overlooked investment opportunity, having delivered strong performance with a 22% year-to-date return and 14.3% five-year annualized return. The ETF employs a quantitative strategy screening for volatile stocks and focusing on momentum, quality, and value factors across 650 stocks. With large-cap valuations near all-time highs and rising rates expected to create market volatility, the ETF's focus on cheap stocks with momentum from quality companies positions it well for uncertain market conditions ahead.
Our take is based on reporting first published by The Motley Fool.