Vanguard to change benchmarks for dividend funds

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VALLEY FORGE, Pa., June 1, 2021 / PRNewswire / – Vanguard today announced its intention to change the target benchmarks for two dividend-focused index funds in the third quarter of this year. The Vanguard Dividend Valuation Index Fund will change its benchmark from the S&P US Dividend Growers Index to the Nasdaq US Dividend Achievers Select Index. The Vanguard International Dividend Appreciation Index Fund will change its benchmark to the S&P Global Ex-US Dividend Growers Index of the Nasdaq International Dividend Achievers Select Index. The respective ETF Shares of these funds, VIG and VIGI, will also follow the new benchmarks.

“As part of our ongoing due diligence process, Vanguard has determined that new benchmarks would best allow our dividend appreciation funds to perform in line with their investment objectives,” said Kaitlyn Caughlin, Chief from Vanguard’s portfolio review service. “We believe the dividend indexing approach of S&P Dow Jones Indices closely aligns with Vanguard’s views, and we are confident that S&P DJI is well positioned to administer the indices going forward.”

The methodology underlying the S&P DJI benchmarks is fully transparent and includes three important new features for the funds:

  • Buffered yield screens intended to minimize excessive rolling. At each annual rebalance, all dividend paying stocks in the investable universe are ranked in order of dividend yield with highest yield on top. A stock may not be admitted for the first time in the index if its dividend yield is in the upper 25%. On subsequent rebalances, any stock already in the index can stay unless its return is in the top 15%.
  • Float settings to ensure that each index will only count stocks available to investors. The benchmarks will exclude closely held stocks, such as those held by family members of a company founder.
  • A three-day rebalancing window to help manage transaction costs and minimize tracking errors. Periodic changes to add, remove or rebalance the constituent stocks of each index will occur over three days instead of one day.

In addition, the performance index of the Vanguard Dividend Growth Fund will be replaced by the S&P US Dividend Growers index. The new benchmark is well aligned with the fund’s investment strategy and will also ensure consistency across Vanguard’s broader range of dividend appreciation funds. The fund will continue to be advised by Wellington Management Company LLP, and the benchmark change is expected in the third quarter of 2021. The investment objectives, strategies and general portfolio management processes of the three funds will not change, and the expense ratios should remain the same.

Vanguard’s approach to benchmark breeding

Based on extensive indexing experience and expertise, Vanguard believes investors benefit from objective, transparent, investable indices that are representative of the risk and return characteristics of the target market. As such, the company has developed and adheres to a multidimensional process for evaluating and selecting benchmarks for funds and ETFs.

The adequacy of each fund’s benchmark index is based on the index construction methodology, market coverage, classification criteria, rebalancing schedule, cost and other standards. Vanguard also regularly assesses index providers to ensure that their data integrity processes and risk management practices support their ability to deliver the timely, accurate, and high-quality data needed to develop and administer indexes. continuous manner. The company attaches great importance to the objectivity, credibility and independence offered by index providers.

An industry pioneer, Vanguard has long been the world leader in indexing. In 1976, Vanguard established the first index-based mutual fund, now Vanguard 500 Index Fund, which seeks to match the performance of the S&P 500 Index. The low-cost and broadly diversified exposure to equity and bond markets offered by Index funds and ETFs has helped improve the results of millions of investors around the world. Today, Vanguard manages $ 6.1 trillion in global index assets.

About Vanguard

Vanguard is one of the largest investment management companies in the world. As of April 30, 2021, Vanguard managed $ 7.8 trillion in global assets. The company, headquartered in Valley Forge, Pa., Offers 439 funds to more than 30 million investors worldwide. For more information visit vanguard.com.

Asset figures as of April 30, 2021, unless otherwise indicated.

For more information on Vanguard funds, visit vanguard.com to obtain a prospectus or, where applicable, a summary prospectus. The investment objectives, risks, costs, expenses and other important information are contained in the prospectus; read it carefully before investing.

Vanguard ETF Shares may only be redeemed from the issuing fund in very large aggregations worth millions of dollars. Instead, investors should buy and sell Vanguard ETF shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and pay more than the NAV when buying and receive less than the NAV when selling.

Any investment is subject to risk, including the possible loss of the money you invest. Investments in equities issued by non-US companies are subject to risks such as country / regional risk and currency risk. These risks are particularly high in emerging markets. Diversification does not ensure a profit or protect against a loss.

The S&P US Dividend Growers Index and S&P Global Ex-US Dividend Growers Index are products of S&P Dow Jones Indices LLC (“S&P DJI”), a division of S&P Global (“S&P”), or its subsidiaries, and have obtained a license for use by Vanguard. S & P® is a registered trademark of Standard & Poor’s Financial Services LLC, a division of S&P; Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these marks have been used under license by S&P DJI and sublicensed for certain purposes by Vanguard. The Vanguard Dividend Appreciation Index Fund and the ETF and the Vanguard International Dividend Appreciation Index Fund and the ETF are not sponsored, endorsed, sold or promoted by S&P DJI, Dow Jones, S&P or their respective affiliates, and neither of these parties make any representation regarding the advisability of investing in such products, and they assume no responsibility for any errors, omissions or interruptions in the S&P US Dividend Growers Index and the S&P Global Ex-US Dividend Growers Index.

Vanguard Marketing Corporation, distributor.

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SOURCE Vanguard



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