diff --git a/src/compose.ts b/src/compose.ts
index 33ce764..7f66c8b 100644
--- a/src/compose.ts
+++ b/src/compose.ts
@@ -253,11 +253,15 @@ function processChanges(composer: Compose) {
   const changes = composer.changes;
   composer.changes = Object.create(null);
 
-  if (needsReInitialization(composer, changes)) {
+  const activationStrategy = determineActivationStrategy(composer);
+  if (needsReInitialization(activationStrategy, changes)) {
+    //when using `replace` activation strategy - we cant force the creation of a new VM
+    const currentViewModel = activationStrategy === ActivationStrategy.Replace ? null : composer.currentViewModel;
+
     // init context
     let instruction = {
       view: composer.view,
-      viewModel: composer.currentViewModel || composer.viewModel,
+      viewModel: currentViewModel || composer.viewModel,
       model: composer.model
     } as CompositionContext;
 
@@ -302,13 +306,16 @@ function requestUpdate(composer: Compose) {
   });
 }
 
-function needsReInitialization(composer: Compose, changes: any) {
+function determineActivationStrategy(composer: Compose): ActivationStrategy {
   let activationStrategy = composer.activationStrategy;
   const vm = composer.currentViewModel;
   if (vm && typeof vm.determineActivationStrategy === 'function') {
     activationStrategy = vm.determineActivationStrategy();
   }
+  return activationStrategy;
+}
 
+function needsReInitialization(activationStrategy: ActivationStrategy, changes: any): boolean {
   return 'view' in changes
     || 'viewModel' in changes
     || activationStrategy === ActivationStrategy.Replace;
diff --git a/test/compose.integration.spec.ts b/test/compose.integration.spec.ts
index 4a0abc1..c3581e9 100644
--- a/test/compose.integration.spec.ts
+++ b/test/compose.integration.spec.ts
@@ -82,10 +82,14 @@ describe('compose.integration.spec.ts', () => {
   });
 
   it('works with determineActivationStrategy() - replace', async () => {
+    let constructorCount = 0;
     const { component, compose } = await bootstrapCompose(
       `<compose view-model.bind="viewModel"></compose>`,
       {
         viewModel: class {
+          constructor() {
+            constructorCount++;
+          }
           // w/o the get view strategy, the initial composition fails, which results to undefined currentViewModel
           getViewStrategy() {
             return new InlineViewStrategy('<template></template>');
@@ -104,6 +108,7 @@ describe('compose.integration.spec.ts', () => {
     compose.modelChanged({ a: 1 }, oldModel);
 
     taskQueue.queueMicroTask(() => {
+      expect(constructorCount).toBe(2, 'constructor count === 2');
       expect(compose.compositionEngine.compose).toHaveBeenCalledTimes(1);
       component.dispose();
     });
@@ -111,11 +116,15 @@ describe('compose.integration.spec.ts', () => {
   });
 
   it('works with determineActivationStrategy() - invoke-lifecycle', async () => {
+    let constructorCount = 0;
     let activationCount = 0;
     const { component, compose } = await bootstrapCompose(
       `<compose view-model.bind="viewModel"></compose>`,
       {
         viewModel: class {
+          constructor() {
+            constructorCount++;
+          }
           activate() {
             activationCount++;
           }
@@ -138,6 +147,7 @@ describe('compose.integration.spec.ts', () => {
     compose.modelChanged({}, oldModel);
 
     taskQueue.queueMicroTask(() => {
+      expect(constructorCount).toBe(1, 'constructor count === 1');
       expect(activationCount).toBe(2, 'activation count === 2');
       component.dispose();
     });