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Is Vanguard Dividend Appreciation ETF (VIG) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Vanguard Dividend Appreciation ETF (VIG - Free Report) debuted on 04/21/2006, and offers 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.
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.
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.
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
The fund is managed by Vanguard, and has been able to amass over $73.24 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the NASDAQ US Dividend Achievers Select Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain 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 1.89%.
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.
Representing 23.50% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Healthcare round out the top three.
Taking into account individual holdings, Microsoft Corp. (MSFT - Free Report) accounts for about 4.83% of the fund's total assets, followed by Apple Inc. (AAPL - Free Report) and Unitedhealth Group Inc. (UNH - Free Report) .
The top 10 holdings account for about 31.31% of total assets under management.
Performance and Risk
The ETF has gained about 13.75% so far this year and was up about 13.61% in the last one year (as of 12/26/2023). In the past 52-week period, it has traded between $147.24 and $171.16.
VIG has a beta of 0.85 and standard deviation of 15.11% for the trailing three-year period, which makes the fund 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.
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 $11.71 billion in assets, iShares Core Dividend Growth ETF has $25.07 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?
A smart beta exchange traded fund, the Vanguard Dividend Appreciation ETF (VIG - Free Report) debuted on 04/21/2006, and offers 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.
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.
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.
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
The fund is managed by Vanguard, and has been able to amass over $73.24 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the NASDAQ US Dividend Achievers Select Index before fees and expenses.
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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain 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 1.89%.
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.
Representing 23.50% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Healthcare round out the top three.
Taking into account individual holdings, Microsoft Corp. (MSFT - Free Report) accounts for about 4.83% of the fund's total assets, followed by Apple Inc. (AAPL - Free Report) and Unitedhealth Group Inc. (UNH - Free Report) .
The top 10 holdings account for about 31.31% of total assets under management.
Performance and Risk
The ETF has gained about 13.75% so far this year and was up about 13.61% in the last one year (as of 12/26/2023). In the past 52-week period, it has traded between $147.24 and $171.16.
VIG has a beta of 0.85 and standard deviation of 15.11% for the trailing three-year period, which makes the fund 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.
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 $11.71 billion in assets, iShares Core Dividend Growth ETF has $25.07 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.