Designed to provide broad exposure to the World ETFs category of the market, the Vanguard International Dividend Appreciation ETF (VIGI Quick QuoteVIGI - Free Report) is a smart beta exchange traded fund launched on 03/03/2016.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

VIGI is managed by Vanguard, and this fund has amassed over $7.32 billion, which makes it one of the largest ETFs in the World ETFs. VIGI seeks to match the performance of the NASDAQ International Dividend Achievers Select Index before fees and expenses.

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

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It's 12-month trailing dividend yield comes in at 1.95%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Sap Se (SAP Quick QuoteSAP - Free Report) accounts for about 4.54% 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 added about 8.42%, and was up about 14.31% in the last one year (as of 12/05/2024). During this past 52-week period, the fund has traded between $75.39 and $88.89.

The fund has a beta of 0.77 and standard deviation of 14.71% for the trailing three-year period. With about 330 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 $77.47 billion in assets, Vanguard FTSE Developed Markets ETF has $138.87 billion. VXUS has an expense ratio of 0.08% and VEA charges 0.06%.

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.