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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) made its debut on 04/21/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Vanguard, and has been able to amass over $65.35 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, VIG 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.
Annual operating expenses for VIG are 0.06%, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.06%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 22.60% of the portfolio. Financials and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp. (MSFT - Free Report) accounts for about 4.83% of total assets, followed by Apple Inc. (AAPL - Free Report) and Unitedhealth Group Inc. (UNH - Free Report) .
Its top 10 holdings account for approximately 31.31% of VIG's total assets under management.
Performance and Risk
The ETF has added roughly 2.53% and was up about 13.30% so far this year and in the past one year (as of 10/23/2023), respectively. VIG has traded between $143.44 and $166.95 during this last 52-week period.
The ETF has a beta of 0.85 and standard deviation of 15.29% for the trailing three-year period, making it a medium risk choice in the space. With about 316 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.
IShares MSCI EAFE Growth ETF (EFG - Free Report) tracks MSCI EAFE Growth Index and the iShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index. IShares MSCI EAFE Growth ETF has $10.98 billion in assets, iShares Core Dividend Growth ETF has $22.69 billion. EFG has an expense ratio of 0.36% 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) made its debut on 04/21/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Vanguard, and has been able to amass over $65.35 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, VIG 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.
Annual operating expenses for VIG are 0.06%, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.06%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 22.60% of the portfolio. Financials and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp. (MSFT - Free Report) accounts for about 4.83% of total assets, followed by Apple Inc. (AAPL - Free Report) and Unitedhealth Group Inc. (UNH - Free Report) .
Its top 10 holdings account for approximately 31.31% of VIG's total assets under management.
Performance and Risk
The ETF has added roughly 2.53% and was up about 13.30% so far this year and in the past one year (as of 10/23/2023), respectively. VIG has traded between $143.44 and $166.95 during this last 52-week period.
The ETF has a beta of 0.85 and standard deviation of 15.29% for the trailing three-year period, making it a medium risk choice in the space. With about 316 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.
IShares MSCI EAFE Growth ETF (EFG - Free Report) tracks MSCI EAFE Growth Index and the iShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index. IShares MSCI EAFE Growth ETF has $10.98 billion in assets, iShares Core Dividend Growth ETF has $22.69 billion. EFG has an expense ratio of 0.36% 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.