The Vanguard International Dividend Appreciation ETF (VIGI Quick QuoteVIGI - Free Report) was launched on 03/03/2016, and is a smart beta exchange traded fund designed to offer 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.

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

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

VIGI is managed by Vanguard, and this fund has amassed over $3.94 billion, which makes it one of the largest ETFs in the World ETFs. Before fees and expenses, VIGI 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.

VIGI's 12-month trailing dividend yield is 8.06%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

When you look at individual holdings, Nestle Sa (NESN) accounts for about 4.49% of the fund's total assets, followed by Roche Holding Ag (ROG Quick QuoteROG - Free Report) and Novartis Ag .

Performance and Risk

So far this year, VIGI has lost about -9.86%, and is down about -2.48% in the last one year (as of 04/22/2022). During this past 52-week period, the fund has traded between $74.04 and $93.17.

The ETF has a beta of 0.77 and standard deviation of 19.94% for the trailing three-year period. With about 351 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 Quick QuoteVXUS - Free Report) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA Quick QuoteVEA - Free Report) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $50.38 billion in assets, Vanguard FTSE Developed Markets ETF has $104.10 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.