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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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Vanguard, and has been able to amass over $84.63 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for VIG are 0.06%, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For VIG, it has heaviest allocation in the Information Technology sector --about 23.50% of the portfolio --while Financials and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.55% of the fund's total assets, followed by Broadcom Inc (AVGO - Free Report) and Microsoft Corp (MSFT - Free Report) .
Performance and Risk
The ETF has gained about 15.75% so far this year and is up about 25.62% in the last one year (as of 11/05/2024). In the past 52-week period, it has traded between $156.91 and $201.52.
The ETF has a beta of 0.84 and standard deviation of 14.66% for the trailing three-year period, making it a medium risk choice in the space. With about 340 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.
WisdomTree U.S. Quality Dividend Growth ETF (DGRW - Free Report) tracks WisdomTree U.S. Quality Dividend Growth Index and the iShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index. WisdomTree U.S. Quality Dividend Growth ETF has $14.55 billion in assets, iShares Core Dividend Growth ETF has $29.99 billion. DGRW has an expense ratio of 0.28% 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Vanguard, and has been able to amass over $84.63 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for VIG are 0.06%, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For VIG, it has heaviest allocation in the Information Technology sector --about 23.50% of the portfolio --while Financials and Healthcare round out the top three.
Taking into account individual holdings, Apple Inc (AAPL - Free Report) accounts for about 4.55% of the fund's total assets, followed by Broadcom Inc (AVGO - Free Report) and Microsoft Corp (MSFT - Free Report) .
Performance and Risk
The ETF has gained about 15.75% so far this year and is up about 25.62% in the last one year (as of 11/05/2024). In the past 52-week period, it has traded between $156.91 and $201.52.
The ETF has a beta of 0.84 and standard deviation of 14.66% for the trailing three-year period, making it a medium risk choice in the space. With about 340 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.
WisdomTree U.S. Quality Dividend Growth ETF (DGRW - Free Report) tracks WisdomTree U.S. Quality Dividend Growth Index and the iShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index. WisdomTree U.S. Quality Dividend Growth ETF has $14.55 billion in assets, iShares Core Dividend Growth ETF has $29.99 billion. DGRW has an expense ratio of 0.28% 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.