Launched on 04/21/2006, the Vanguard Dividend Appreciation ETF (VIG) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend 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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Vanguard. It has amassed assets over $92.31 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. VIG, before fees and expenses, 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
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 this ETF are 0.05%, making it one of the least expensive products in the space.
VIG's 12-month trailing dividend yield is 1.72%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 25.9% of the portfolio --while Financials and Healthcare round out the top three.
Taking into account individual holdings, Broadcom Inc (AVGO) accounts for about 5.11% of the fund's total assets, followed by Microsoft Corp (MSFT) and Jpmorgan Chase & Co (JPM).
Performance and Risk
The ETF has added roughly 5.27% so far this year and was up about 10.67% in the last one year (as of 07/16/2025). In the past 52-week period, it has traded between $173.71 and $207.81
The fund has a beta of 0.85 and standard deviation of 14.24% for the trailing three-year period, which makes VIG a medium risk choice in this particular space. With about 339 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) tracks WisdomTree U.S. Quality Dividend Growth Index and the iShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index. WisdomTree U.S. Quality Dividend Growth ETF has $15.95 billion in assets, iShares Core Dividend Growth ETF has $32.19 billion. DGRW has an expense ratio of 0.28% and DGRO changes 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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Vanguard Dividend Appreciation ETF (VIG): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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