VGRO targets companies with accelerating revenue and earnings growth, focusing on firms that can sustain high growth rates through competitive advantages. The fund aims to capture the outperformance potential of growth stocks while maintaining some quality screens to avoid speculative names.
How It Works
The fund employs a multi-factor growth screen that emphasizes revenue growth consistency, earnings acceleration, and improving margins. Holdings are weighted by a composite growth score rather than market cap, giving more weight to companies with the strongest fundamental momentum. The portfolio rebalances quarterly to capture emerging growth stories while cutting positions in companies with decelerating metrics.
Key Features
- Growth score weighting gives smaller high-growth names more impact than typical market-cap weighted growth funds
- Quarterly rebalancing captures momentum shifts faster than semi-annual competitors
- Quality overlay screens out unprofitable companies despite high revenue growth
Risks
- Growth stocks can lose 40-60% in bear markets when investors flee to value and quality
- High portfolio turnover from quarterly rebalancing could create significant tax drag in taxable accounts
- Zero AUM at launch means wide bid-ask spreads and potential tracking issues until assets grow
Who Should Own This
Best suited for aggressive investors with 10+ year horizons who can stomach 30%+ drawdowns and want concentrated growth exposure. Works as a 10-20% satellite position alongside core holdings, not as a primary equity allocation. Tax-deferred accounts preferred given the high turnover strategy.