ETF Talk

An Income Fund That Rewards the Patient Investors

This week’s exchange-traded fund, the Vanguard Dividend Appreciation ETF (VIG), focuses on a strategy based neither on value nor growth investing. Instead, VIG selects U.S. companies that have appreciating dividend yields, as its name implies.

Specifically, VIG holds companies that have increased their annual dividends for 10 or more consecutive years, known to some as the “dividend achievers.” This distinguishes VIG from many other dividend funds such as the Vanguard High Dividend Yield ETF (VYM), which typically focuses on stocks that have the highest current yield.

Dividends not only provide a steady stream of income, they also reduces a portfolio’s risk profile. This his helped VIG avoid some of the market’s weakness from time to time. For example, during the 2008 crisis, the fund decreased by a little over 30% while the S&P 500 shed over 37%.

VIG is one of the most popular ETFSs in the U.S. market, managing $24.55 billion in total assets, and has an average daily trading volume of $51.89 million. VIG is fully invested and employs a passively managed, full-replication strategy that focuses on large equities, with the philosophy that income-producing equities will outperform other types of equities over the long term.

Click here to read the rest of the article, “An Income Fund that Rewards the Patient Investors.

 


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