Is Vanguard Dividend Appreciation ETF (VIG) a Strong ETF Right Now?

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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

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, and has been able to amass over $86.90 billion, which makes 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

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.

Operating expenses on an annual basis are 0.05% for VIG, making it one of the least expensive products in the space.

VIG's 12-month trailing dividend yield is 1.85%.

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.

VIG's heaviest allocation is in the Information Technology sector, which is about 24.40% of the portfolio. Its Financials and Healthcare round out the top three.

Taking into account individual holdings, Apple Inc (AAPL) accounts for about 4.85% of the fund's total assets, followed by Broadcom Inc (AVGO) and Jpmorgan Chase & Co (JPM).

Performance and Risk

So far this year, VIG has lost about -1.36%, and it's up approximately 8.48% in the last one year (as of 05/12/2025). During this past 52-week period, the fund has traded between $173.71 and $205.23.

VIG has a beta of 0.85 and standard deviation of 14.96% for the trailing three-year period, which makes the fund a medium risk choice in the 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 $14.63 billion in assets, iShares Core Dividend Growth ETF has $30.18 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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This article originally published on Zacks Investment Research (zacks.com).

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