Is Vanguard International Dividend Appreciation ETF (VIGI) a Strong ETF Right Now?

The Vanguard International Dividend Appreciation ETF (VIGI) made its debut on 03/03/2016, and is a smart beta exchange traded fund that provides broad exposure to the World ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

Because the fund has amassed over $5.89 billion, this makes it one of the largest ETFs in the World ETFs. VIGI is managed by Vanguard. Before fees and expenses, this particular fund seeks to match the performance of the NASDAQ International Dividend Achievers Select Index.

The S&P Global Ex-U.S. Dividend Growers Index focuses on high quality companies located in developed and emerging markets, excluding the United States, that have both the ability and the commitment to grow their dividends over time.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Operating expenses on an annual basis are 0.15% for VIGI, making it one of the least expensive products in the space.

It's 12-month trailing dividend yield comes in at 1.94%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Novo Nordisk A/s (NOVOB) accounts for about 5.43% of total assets, followed by Sap Se (SAP) and Novartis Ag (NOVN).

Performance and Risk

The ETF has lost about -0.82% and it's up approximately 8.06% so far this year and in the past one year (as of 01/25/2024), respectively. VIGI has traded between $68.61 and $79.61 during this last 52-week period.

The ETF has a beta of 0.79 and standard deviation of 14.99% for the trailing three-year period. With about 322 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard International Dividend Appreciation ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard Total International Stock ETF (VXUS) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $62.09 billion in assets, Vanguard FTSE Developed Markets ETF has $120.66 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

 

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Vanguard International Dividend Appreciation ETF (VIGI): ETF Research Reports

SAP SE (SAP) : Free Stock Analysis Report

Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports

Vanguard Total International Stock ETF (VXUS): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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