Making its debut on 03/03/2016, smart beta exchange traded fund Vanguard International Dividend Appreciation ETF (VIGI Quick QuoteVIGI - Free Report) provides investors broad exposure to the World ETFs category of the market.

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 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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

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 $7.17 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.

The fund has a 12-month trailing dividend yield of 1.89%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

Looking at individual holdings, Sap Se (SAP Quick QuoteSAP - Free Report) accounts for about 4.94% of total assets, followed by Roche Holding Ag (ROG Quick QuoteROG - Free Report) and Novartis Ag .

Performance and Risk

So far this year, VIGI has gained about 2.34%, and is up roughly 5.10% in the last one year (as of 02/04/2025). During this past 52-week period, the fund has traded between $77.44 and $88.89.

The ETF has a beta of 0.78 and standard deviation of 14.57% 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 $76.85 billion in assets, Vanguard FTSE Developed Markets ETF has $137.79 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.