The VictoryShares International Value Momentum ETF (UIVM) represents an investment vehicle that merges established financial strategies: value, momentum, and low-volatility weighting. This exchange-traded fund aims to capture potential upside from undervalued assets and those showing upward price trends, while simultaneously mitigating risk through a low-volatility component. However, despite its diversified structure across various global markets and numerous individual companies, UIVM's market performance has not consistently matched or surpassed that of its peers. This has led some analysts to question its overall attractiveness compared to more specialized or established single-factor ETFs.
Ultimately, UIVM's current standing prompts a reevaluation of its strategic advantages. While the blend of factors is theoretically sound, the practical application and subsequent returns suggest that investors might achieve better results by exploring alternative funds. These alternatives often boast lower operational costs, greater ease of trading, and a history of more compelling returns, making them more formidable contenders in the international investment landscape.
Understanding UIVM's Investment Philosophy
The VictoryShares International Value Momentum ETF, known by its ticker UIVM, was introduced to the market on October 4, 2017. This fund is designed to mirror the performance of the Nasdaq Victory International Value Momentum Index, which itself is a sophisticated benchmark that combines principles of value investing and momentum strategies. A key aspect of UIVM's design is its integration of a low-volatility weighting approach. This means the fund not only seeks out companies that appear undervalued and those exhibiting strong price trends, but also aims to reduce overall portfolio risk by giving greater weight to stocks that have historically shown less price fluctuation. The ETF maintains a diverse portfolio, currently holding 193 different stocks, which helps spread investment risk across a broad range of companies and sectors. Furthermore, UIVM offers investors a dividend yield of 3.56%, providing a regular income stream, and operates with a net expense ratio of 0.35%, indicating the annual cost of holding the fund's assets.
UIVM's strategy is built on the premise that combining these distinct investment factors—value, momentum, and low volatility—can lead to superior risk-adjusted returns in international markets. Value investing focuses on purchasing securities that trade for less than their intrinsic worth, based on various financial metrics. Momentum investing, conversely, involves buying assets that have performed well recently, anticipating that this trend will continue. The low-volatility overlay is intended to smooth out returns, making the investment less susceptible to large swings in market conditions. By diversifying across numerous countries and individual holdings, UIVM aims to capture broad market exposure while managing specific company or regional risks. The fund's primary sector exposure currently leans towards financials, reflecting a strategic allocation based on its underlying index's methodology. This multi-factor approach attempts to create a robust portfolio capable of navigating various economic cycles while delivering competitive returns and income to its investors.
Comparative Performance and Investor Considerations
Despite its innovative multi-factor investment approach, the VictoryShares International Value Momentum ETF (UIVM) has faced challenges in achieving competitive returns when compared to several prominent benchmarks and single-factor exchange-traded funds. Analysis indicates that UIVM's performance has not kept pace with funds like FDT, which is another multi-factor ETF, nor has it consistently outperformed other international value or momentum-focused investment vehicles. This underperformance suggests that while the blend of value, momentum, and low-volatility factors is theoretically sound, its practical application within UIVM has not translated into a clear advantage over alternative investment strategies. For investors prioritizing strong historical returns, UIVM's track record may present a less compelling case when viewed alongside more robust performers in the international equity space.
Furthermore, when evaluating UIVM against single-factor ETFs such as IDMO (which focuses solely on momentum) and EFV (an international value fund), UIVM appears less attractive on several key metrics. These single-factor counterparts often benefit from lower expense ratios, meaning investors retain a larger portion of their returns, and tend to exhibit higher trading liquidity, facilitating easier entry and exit from positions. Their established track records frequently demonstrate more consistent and often superior performance compared to UIVM. Therefore, for investors seeking efficiency, liquidity, and a proven history of generating returns, these specialized funds may represent a more judicious choice. The relatively higher costs and less convincing performance history of UIVM, despite its diversified and factor-blended strategy, necessitate a thorough consideration of these alternatives, particularly for those looking to optimize their international equity exposure.
