VIGI’s annual fee is 0.25%, or $25 on a $10,000 investment, which makes the Vanguard fund cheaper than 75% of competing strategies, according to issuer data.
“This fund’s focus on dividend growth makes it significantly different from those that emphasize dividend yield,” said Morningstar. “A narrow focus on yield brings about certain risks because high yields can be an indicator of firms that may be in financial distress or have poor forward-looking prospects. These stocks trade at lower prices relative to dividends paid and can be risky. Other high-yielding stocks may be paying out a large fraction of their earnings. These companies may be at risk of cutting their dividends because increasing payments in the future is unsustainable.”
Morningstar has a Bronze rating on VIGI, a rating driven in part by the fund’s still short track record.
For more on smart beta ETFs, visit our Smart Beta Channel.