Principal & Portfolio Manager
Head of ETF Product Management
Vanguard rolled out the Vanguard International High Dividend Yield ETF (VYMI) in a dual launch with the Vanguard International Dividend Appreciation ETF (VIGI) last year. VYMI, now with $270 million in assets under management, was recently named the “Best New Smart-Beta/Factor ETF” in a tie with another fund at this year’s ETF.com Awards. Here, Vanguard’s Rich Powers and Mike Perre explain why VYMI has been such a hit.
Would you start off by telling me about the broad benchmark Vanguard uses for VYMI?
Rich Powers: The FTSE All-World ex US High Dividend Yield Index; it’s basically non-U.S. high-dividend payers.
All stocks that are forecast to have a zero yield over the next 12 months or do not have available information to forecast the yield are excluded from the index. Everything else is kind of left over to consider, with the exception of REITs; REITs are also excluded from the index.
Forty-one countries are represented by the index and the fund. It’s a pretty wide swath, but if you look at the five largest countries, they account for about 50% of the assets. There, we’re talking about the U.K., Switzerland, Australia, Japan and Canada.
Emerging markets are about 18% of the fund’s weight. So you’re getting a very broad swath of exposures from a regional/country/company perspective by purchasing a fund like this, with what we estimate to be a 4% dividend yield.
This seemed like a hole in the Vanguard lineup before VYMI launched. Why did it take so long for Vanguard to launch an international dividend fund?
Powers: Very good point. With the Vanguard approach to developing products, we take our time to make sure there’s an investment case, there’s an end buyer for the product, that we can do it well and that we can do it inexpensively. All that had to come together for us to get to a point where we launched this product as well as its companion product, the Vanguard International Dividend Appreciation Index ETF (VIGI). We’ve had the U.S. products for about 10 years, and this kind of filled out the suite in terms of passive dividend-oriented funds.