Investors who are concerned about the high valuations of US tech stocks, or who want to diversify their portfolios beyond US stocks, are showing interest in international stocks. Buying an international stock-focused exchange-traded fund (ETF) can be a good way to put your money in other parts of the global economy.
Recent Vanguard research estimates that “developed markets outside the US” could be among the best investment opportunities over the next few years. One way to pursue that strategy is to invest Vanguard International Dividend Appreciation ETF (Wiggy +0.22%). This ETF holds a portfolio of stocks focused on developed market economies, with a heavy weighting JapaniCanadian, Swiss, German and British stocks.
Let’s take a closer look at this international dividend etf offer For investors, and those who would like to consider buying it.
Image Source: Getty Images.
Vanguard International Dividend Appreciation ETF (VIGI): 343 stocks, 2.13% dividend yield
Vanguard International Dividend Appreciation ETF provides exposure to 343 global stocks from 24 countries in addition to the US market. This fund invests in companies with a history of dividend growth. it charges less expense ratio Of 0.07%.
Despite recent investor enthusiasm international stockThis fund has given tremendous returns. It has given an average annual total return (based on net asset value) of 8.1% for the last 10 years, 4.9% for the last five years, 11.3% for the last three years and 9.4% for the last year.
Vanguard Whitehall Funds – Vanguard International Dividend Appreciation ETF
today’s change
(0.22%) $0.21
current price
$94.47
key data points
Om
$9.2B
dividend yield
2.11%
expense ratio
0.07%
Top Holdings
RYTO
4.52%
8306.t
3.98%
nesnsw
3.83%
The fund’s dividend is good, but not great. Its trailing 12-month dividend yield is 2.13%, which is lower than the yield of some best dividend index funds.
What do you get when you invest in VIGI? The fund’s portfolio mainly consists of developed markets. Only 5.1% of the fund’s assets are invested in emerging market stocks. The top five countries represented in the portfolio are Japan (30.9% of the fund), Canada (23%), Switzerland (14.4%), Germany (5.5%), and the United Kingdom (5.6%).
The top 10 stock holdings include global financial stocks Royal Bank of Canada (4.47% of the fund), consumer staples giant to shelter (3.8%), preferred by Swiss pharmaceutical majors novartis (3.55%) and Roche Holding AG (3.39%), and global tech stocks such as Germany SAP (3.3%) and Japan’s Hitachi (2.6%).
Reasons to buy VIGI…or not
If you believe that these other countries and more value-oriented sectors of the global economy are likely to outperform in the future, the Vanguard International Dividend Appreciation ETF can give you a decently diversified portfolio tailored to that investment theme. However, this fund has some potential risks and drawbacks. For one, it has a long track record of having superior performance (by more than 2 to 1). S&P 500 Index.
data by YCharts.
VIGI’s dividend yield is also less than impressive. A portfolio of only 343 stocks may not be diversified enough for the goals of many investors, especially since the fund is concentrated in only a few countries. More than 50% of the fund is invested in Japan and Canada.
I don’t own this fund, and I don’t rate it as a strong buy. More widely diversified shopping High-Dividend ETFs like Vanguard International High Dividend Yield ETF (VYMI +0.27%) This may be a better option for most long-term investors seeking international exposure.