An Excellent ETF fund: Vanguard Dividend Appreciation
If you’re looking for a great vehicle to meet some of your financial goals, the Vanguard Dividend Appreciation (NYSEARCA: VIG) exchange traded fund (ETF) is definitely one you should consider.
ETF’s are investment funds that, like standard stocks, are traded on the various stock exchanges. The big difference is that they track either the performance of a number of different assets (like VIG), a commodity like gold or silver or an index like the S&P. The reason that we like Vanguard is that it follows the NASDAQ Dividend Achievers Select index, an index that has a variety of stocks that have faithfully, year after year, increased their dividends. For investors this means protection from the volatility of the stock market and an investment that delivers reliable dividend revenues due to buyers that are seasoned professionals.
Unlike mutual funds where money is pooled by do-it-yourself investors and then given to a professional fund manager to invest, ETF’s are traded throughout the day. What’s good about both of these options is that, since there’s no need to continually monitor the stock market, they are great for everyday investors. While mutual funds have a minimum investment however, ETF’s don’t and generally will deliver more “bang for your buck” as they are more tax efficient.
With a 9.9% gain for the year (compared to 8.8% for the S&P) the ETF from Vanguard Dividend Appreciation has solid returns and a 2.17% 12 month yield. While it doesn’t gain as much as some other well managed mutual funds, since it focuses on quality it’s less of a risk. On the plus side the fact that VIG is so passive means that expense rates are ridiculously low and thus profits are higher. Indeed, most similar holdings and mutual funds have an expense rate that hovers around 1% while VIGs expense rate comes in at 0.13%, or 88% lower!
And, even though they’re on the passive side, VIG still conducts screenings to make sure that their firms are financially strong and, when necessary, dumps the ones that aren’t.
Even better for the average consumer is that, since Vanguard has holdings in a lot of companies that the average consumer uses daily, investing in their ETF can be very satisfying. Companies like Coca-Cola, Procter & Gamble, Wal-Mart and Pepsi are included in their top 5 holdings and they also have holdings in energy, healthcare and other major industries. Quality, strong balance sheets and modest risk are they common themes that all of these companies share and that Vanguard vigorously seeks out.
So, as we stated at the beginning of this blog article, Vanguard Dividend Appreciation is definitely one of the better exchange traded funds that you going to find on the market today and worth your consideration if you’re looking for a low risk, relatively high return investment. It’s also something that the average consumer can invest in with confidence.
If you have questions about investing, the stock market, stocks, ETF’s or any other personal finance questions, please let us know and will get back to you with options, advice and solutions ASAP.
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