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Is Vanguard Dividend Appreciation ETF (VIG) a Strong ETF Right Now?
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The Vanguard Dividend Appreciation ETF (VIG - Free Report) was launched on 04/21/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Blend 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Vanguard, VIG has amassed assets over $67.38 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. VIG, before fees and expenses, seeks to match the performance of the NASDAQ US Dividend Achievers Select Index.
The S&P U.S. Dividend Growers Index consists of common stocks of companies that have a record of increasing dividends over time.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.06%.
It has a 12-month trailing dividend yield of 1.90%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 23.60% of the portfolio. Financials and Healthcare round out the top three.
Taking into account individual holdings, Unitedhealth Group Inc. (UNH - Free Report) accounts for about 4.08% of the fund's total assets, followed by Johnson & Johnson (JNJ - Free Report) and Microsoft Corp. (MSFT - Free Report) .
VIG's top 10 holdings account for about 14.54% of its total assets under management.
Performance and Risk
Year-to-date, the Vanguard Dividend Appreciation ETF has added about 3% so far, and is down about -1.83% over the last 12 months (as of 02/07/2023). VIG has traded between $135.16 and $165.05 in this past 52-week period.
The fund has a beta of 0.85 and standard deviation of 22.94% for the trailing three-year period, which makes VIG a medium risk choice in this particular space. With about 289 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Dividend Appreciation ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
ProShares S&P 500 Dividend Aristocrats ETF (NOBL - Free Report) tracks S&P 500 DividendAristocrats Index and the iShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index. ProShares S&P 500 Dividend Aristocrats ETF has $11.44 billion in assets, iShares Core Dividend Growth ETF has $24.41 billion. NOBL has an expense ratio of 0.35% and DGRO charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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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Is Vanguard Dividend Appreciation ETF (VIG) a Strong ETF Right Now?
The Vanguard Dividend Appreciation ETF (VIG - Free Report) was launched on 04/21/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Blend 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Vanguard, VIG has amassed assets over $67.38 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. VIG, before fees and expenses, seeks to match the performance of the NASDAQ US Dividend Achievers Select Index.
The S&P U.S. Dividend Growers Index consists of common stocks of companies that have a record of increasing dividends over time.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.06%.
It has a 12-month trailing dividend yield of 1.90%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 23.60% of the portfolio. Financials and Healthcare round out the top three.
Taking into account individual holdings, Unitedhealth Group Inc. (UNH - Free Report) accounts for about 4.08% of the fund's total assets, followed by Johnson & Johnson (JNJ - Free Report) and Microsoft Corp. (MSFT - Free Report) .
VIG's top 10 holdings account for about 14.54% of its total assets under management.
Performance and Risk
Year-to-date, the Vanguard Dividend Appreciation ETF has added about 3% so far, and is down about -1.83% over the last 12 months (as of 02/07/2023). VIG has traded between $135.16 and $165.05 in this past 52-week period.
The fund has a beta of 0.85 and standard deviation of 22.94% for the trailing three-year period, which makes VIG a medium risk choice in this particular space. With about 289 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Dividend Appreciation ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
ProShares S&P 500 Dividend Aristocrats ETF (NOBL - Free Report) tracks S&P 500 DividendAristocrats Index and the iShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index. ProShares S&P 500 Dividend Aristocrats ETF has $11.44 billion in assets, iShares Core Dividend Growth ETF has $24.41 billion. NOBL has an expense ratio of 0.35% and DGRO charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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.