A smart beta exchange traded fund, the Vanguard International Dividend Appreciation ETF (VIGI) debuted on 03/03/2016, and offers broad exposure to the Foreign Large Blend ETF 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.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Vanguard. VIGI has been able to amass assets over $8.96 billion, making it one of the larger ETFs in the Foreign Large Blend ETF. 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for VIGI are 0.10%, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.87%.
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.
Looking at individual holdings, Royal Bank Of Canada (RY) accounts for about 4.19% of total assets, followed by Novartis Ag (NOVN) and Mitsubishi Ufj Financial Group Inc.
Performance and Risk
So far this year, VIGI has gained about 14.76%, and it's up approximately 6.4% in the last one year (as of 10/17/2025). During this past 52-week period, the fund has traded between $75.29 and $91.39.
VIGI has a beta of 0.75 and standard deviation of 13.37% for the trailing three-year period. With about 340 holdings, it effectively diversifies company-specific risk .
Alternatives
Vanguard International Dividend Appreciation ETF is a reasonable option for investors seeking to outperform the Foreign Large Blend ETF segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $108.47 billion in assets, Vanguard FTSE Developed Markets ETF has $180.62 billion. VXUS has an expense ratio of 0.05% and VEA changes 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Foreign Large Blend ETF
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 International Dividend Appreciation ETF (VIGI): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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