VUG: Backing A Growth Factor Tilt

Summary

• A bullish steepening of the yield curve looks set to occur, especially if real economic variables are considered.
• Regression analysis shows that growth factors provide excellent returns during bullish steepening.
• Vanguard Growth Index Fund ETF Shares has additional value-additivity through a robust return-on-equity ratio and best-in-class constituent exposure.
• Concentration risk and tail risk are likely risk factors. However, most of VUG's salient variables suggest it is a strong buy.

Ong-ad Nuseewor/iStock via Getty Images

The Vanguard Growth Index Fund ETF Shares (NYSEARCA:VUG) is in focus today as we turn our attention to factor investing. Although delivering robust returns since the start of the year, VUG ETF has pulled back by more

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Kindly note that our content on Seeking Alpha and other platforms doesn't constitute financial advice. Instead, we set the tone for a discussion panel among subscribers. As such, we encourage you to consult a registered financial advisor before committing capital to financial instruments.