Daily ETF Watch: Vanguard Plans 2 Funds

According to a report from Kiplinger, Vanguard is set to roll out two international dividend strategies in early 2016. The Vanguard International Dividend Appreciation ETF and Vanguard International High Dividend Yield Index ETF will launch as ETF shares of two Vanguard index mutual funds.

Vanguard doesn’t launch a lot of ETFs, preferring to cover core asset classes rather than niches and complex strategies. The last ETF the firm launched made its debut in August and was the firm's first ETF in two years; the Vanguard Tax-Exempt Bond ETF (VTEB) has since accumulated $111.1 million in assets under management.

Dividend-focused strategies are about as complex as Vanguard gets, and about as far into the smart-beta trend as it is willing to venture. Both of these proposed international ETFs have corresponding U.S.-focused funds already trading.

The “Dividend Appreciation” ETF offers exposure to non-U.S. developed and emerging markets that have track records of growing their dividend distributions and have plans to continue to do so; similarly, the $19.2 billion Vanguard Dividend Appreciation ETF (VIG | A-82) does the same while targeting the U.S. stock market. Meanwhile, the “High Dividend Yield” ETF is the international answer to the $11.2 billion Vanguard High Dividend Yield ETF (VYM | A-97) and targets emerging and developed-market equities that are expected to have above-average dividend yields over the next 12-month period.

The filing did not list tickers for either fund, but it did include expense ratios. The high-dividend-yield ETF will charge an expense ratio of 0.30%, while the dividend appreciation fund will come with an expense ratio of 0.25%.

Contact Heather Bell at [email protected].