Vanguard is the second-largest U.S. issuer of exchange traded funds and adding assets at a feverish. However, the company does not bring many new ETFs to market, but when it does, those funds are usually successful.
Just look at the Vanguard International Dividend Appreciation ETF (NasdaqGM: VIGI), which debuted in early March 2016. At the end of March 2017, VIGI had nearly $360 million in assets under management, easily making it one of the most successful ETFs to debut last year.
VIGI is the international answer to the popular Vanguard Dividend Appreciation ETF (NYSEArca: VIG), the largest U.S. dividend ETF.
VIGI, one of just two new ETFs launched by Vanguard last year, “emphasizes stocks exhibiting dividend growth and seeks to track the Nasdaq International Dividend Achievers Select Index, which comprises more than 200 all-cap developed and emerging markets stocks with a track record of increasing annual dividend payments,” according to Vanguard.
VIGI makes sense for dividend investors of all types because an often overlooked fact to dividend investing is that a significant amount of the world’s dividend-paying stocks are found outside the U.S. Additionally, many developed markets dividend payers feature higher yields than the competing U.S. equities.
Investors should note VIGI allocates nearly 21% of its weight to emerging markets dividend stocks, a potentially potent, but also volatile group of dividend payers. Emerging markets dividend growth has outpaced developed world payout growth over the past decade and market observers expect that trend to continue, but some advisors and investors gloss over emerging markets dividend exchange traded funds. However, that growth came under pressure last year as commodities prices slumped.
Low interest rates in the U.S. have sent investors flocking to dividend stocks and exchange traded funds in recent years. With central banks throughout the developed world paring rates and engaging in monetary easing, government bond yields are falling, giving investors good reason to consider international dividend ETFs.
VIGI allocates nearly 45% of its weight to European dividend stocks and Canada chimes in at over 14%. The median market value of the ETF’s holdings is over $50 billion, according to issuer data.
As is the case with so many Vanguard ETFs, VIGI is attractively priced at 0.25% per year, making it cheaper than 77% of competing funds.
For more information on dividend stocks, visit our dividend ETFs category.