In a world where investment strategies are constantly evolving, the question of whether to invest in international dividend ETFs arises. Today, we're diving into the comparison between VYMI and VIGI, two Vanguard ETFs offering exposure to international dividend stocks. This discussion is particularly relevant given recent research suggesting that international markets might outperform the U.S. in the coming years.
The Vanguard International High Dividend Yield ETF (VYMI)
VYMI has been a strong performer, delivering an impressive 188.1% total return over the past decade. This ETF holds a diverse portfolio of 1,578 global stocks, with a focus on developed markets like Europe, the Pacific region, and Canada. Its top holdings include well-known names such as HSBC Holdings, Roche Holding, and Shell, offering a mix of financial stability and high dividend yields. With an annualized return of 11.2% over the past 10 years and a low expense ratio of 0.07%, VYMI presents an attractive option for investors seeking international exposure.
Vanguard International Dividend Appreciation ETF (VIGI)
VIGI takes a different approach, with a more concentrated portfolio of 343 stocks. While it also focuses on developed markets, its allocation to emerging markets is significantly lower at just 5.1%. The fund's top holdings include Royal Bank of Canada, Mitsubishi UFJ Financial Group, and SAP. However, VIGI's performance has lagged behind VYMI, with annualized returns of 7.98% over the past decade. Its dividend yield is also lower, at 2.13%, and its P/E ratio is higher, making it a less attractive option compared to VYMI.
Why VYMI Might Be the Better Choice
VYMI's diversification, lower P/E ratio, and higher dividend yield make it a compelling choice for long-term investors. Its portfolio is spread across a larger number of stocks, reducing concentration risk. Additionally, its focus on developed markets aligns with the recent research suggesting that these markets might outperform in the next few years. VYMI's strong historical performance and competitive expense ratio further solidify its position as a preferred choice for investors seeking international dividend exposure.
Final Thoughts
When considering international dividend ETFs, VYMI stands out as a more attractive option compared to VIGI. Its diversification, strong performance, and alignment with market trends make it a compelling choice for investors looking to diversify their portfolios beyond the U.S. market. While VIGI has its merits, VYMI's overall package of features makes it a more compelling investment opportunity.
