Vanguard has launched its first dividend-oriented international equity index funds – Vanguard International High Dividend Yield Index Fund and Vanguard International Dividend Appreciation Index Fund, both of which have an ETF share class.
Vanguard International High Dividend Yield Index Fund follows an income investing strategy, focusing on companies with high dividend yields. The fund will seek to track the FTSE All-World ex US High Dividend Yield Index, a benchmark of more than 800 of the highest yielding large- and mid-cap developed and emerging markets securities.
Vanguard International Dividend Appreciation Index Fund emphasises 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.
Vanguard has a variety of actively managed and indexed dividend-oriented US stock funds, including those that are focused on current income and those focused on dividend growth. In particular, the two new funds will complement Vanguard’s existing domestic dividend-oriented index funds: The USD16 billion Vanguard High Dividend Yield Index Fund and the USD23 billion Vanguard Dividend Appreciation Index Fund.
“Investors continue to adopt the indexing strategy both through traditional index funds and ETFs,” says Vanguard CEO Bill McNabb (pictured). “Of our record USD236 billion in cash flow in 2015, more than 90 per cent was directed to an index product.”
Since introducing its first ETF in 2001, Vanguard has emerged as an ETF leader and now manages more than USD507 billion in global ETF assets. Investors entrusted more than USD82 billion to Vanguard ETFs in 2015 – the most in the firm’s history.
The firm manages some of the industry’s largest ETFs, including the USD54 billion Vanguard Total Stock Market ETF (VTI), USD40 billion Vanguard S&P 500 ETF (VOO), and USD32 billion Vanguard FTSE Emerging Markets ETF (VWO).
Financial advisors were early adopters of Vanguard’s low-cost, broad-based ETFs. Today, Vanguard is the second largest ETF provider by assets and is among the most trusted. Vanguard was ranked highest in favourability among registered investment advisors (90%) and current ETF users (86%), according to Cogent’s 2015 Advisor Brandscape report. The firm’s favorability rating among all advisors was 74 per cent.
Vanguard has also been making ETF strategic portfolios available as allocation strategies and portfolio construction tools for financial advisors since 2010. The models have been made available on Vanguard’s website and, on a limited basis, to certain third-party technology platforms.
The new offerings also broaden Vanguard’s commission-free ETF line-up. Individual investors now have a choice of 70 low-cost ETFs to purchase on a commission-free basis. Vanguard has offered commission-free ETF transactions to clients since 2010.
Individual investors are increasingly adding ETFs to their investment portfolios. Ownership of Vanguard ETFs among individual investors has grown nearly 40 per cent per year since 2011. Vanguard High Dividend Yield ETF (VYM) and Vanguard Dividend Appreciation ETF (VIG) are among the most widely held Vanguard ETFs by Vanguard retail clients.