Making its debut on 03/03/2016, smart beta exchange traded fund Vanguard International Dividend Appreciation Index Fund ETF Shares (VIGI) provides investors 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Vanguard, VIGI has amassed assets over $8.74 billion, making it one of the larger ETFs in the Foreign Large Blend ETF. This particular fund 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.72%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Taking into account individual holdings, Royal Bank Of Canada (RY) accounts for about 4% of the fund's total assets, followed by Nestle Sa (NESN) and Novartis Ag (NOVN).
Performance and Risk
So far this year, VIGI has gained about 3.13%, and it's up approximately 7.69% in the last one year (as of 06/22/2026). During this past 52-week period, the fund has traded between $85.45 and $96.24.
VIGI has a beta of 0.70 and standard deviation of 13.02% for the trailing three-year period. With about 377 holdings, it effectively diversifies company-specific risk .
Alternatives
Vanguard International Dividend Appreciation Index Fund ETF Shares 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 Index Fund ETF Shares (VXUS) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock Index Fund ETF Shares has $154.78 billion in assets, Vanguard FTSE Developed Markets Index Fund ETF Shares has $232.79 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
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Vanguard International Dividend Appreciation Index Fund ETF Shares (VIGI): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).