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VIGI: Foreign Dividend Growers Losing Relative Steam, But Solid Potential This Year

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It's each astir nan dollar correct now. Do you work together pinch that? While astir pundits declare nan Fed's manus is nan eventual guiding facet of nan marketplace currently, a caller bounce backmost successful nan greenback has had important implications for equities. Mainly foreign stocks.

US Dollar Index: More Important Than Investors Realize

 More Important Than Investors Realize

Stockcharts.com

International investors cognize this afloat well. The ex-US marketplace handily hit nan S&P 500 since September erstwhile nan US Dollar Index peaked, but a bounce disconnected cardinal support connected nan DXY's floor plan has resulted successful immoderate antagonistic alpha for indexes abroad. One ETF, a favourite among dividend investors, has underperformed successful caller weeks, too. But is now nan clip to buy? Let's outline nan consequence and reward prospects connected nan Vanguard International Dividend Appreciation ETF (NASDAQ:VIGI).

According to Vanguard, VIGI offers investors vulnerability to nan S&P Global Ex-US Dividend Growers Index done a passively managed, full-replication strategy. With its cap-weighted nature, it is chiefly exposed to ample caps, truthful nan apical holdings are immoderate of nan awesome growth-oriented blue-chip multinationals domiciled distant from nan States. There is simply a spot other consequence compared to a plain vanilla developed markets ETF since VIGI includes emerging marketplace equities truthful agelong arsenic an EM sanction has a way grounds of increasing dividends each year.

What I for illustration astir VIGI is that its disbursal ratio is bottommost of nan tube astatine conscionable 15 ground points. Vanguard notes that nan mean disbursal ratio of comparable products is multiples of that astatine 0.90%. Also perfect for investors and plaything traders alike is VIGI's 0.04% 30-day median bid/ask spread, though I see mean regular measurement of little than 400,000 shares not overly impressive.

The ETF is not astir arsenic diversified arsenic broader scale funds. Rather, it holds conscionable 311 individual equities pinch a median marketplace headdress of $73.9 billion, and nan money does not move complete very overmuch astatine conscionable 22% successful 2022. Investors get immoderate net maturation pinch this money - Vanguard notes that its EPS maturation complaint is simply a coagulated 11.2% while nan guardant P/E is 20, truthful that's a PEG ratio a smidgen beneath 2 - decent but not excessively inexpensive correct now.

VIGI Fundamentals & Valuations

VIGI Fundamentals & Valuations

Vanguard

Morningstar notes that galore of VIGI's biggest positions are highly rated. The money arsenic a full sports a robust 4-star metallic standing from nan investigation firms owed to its debased costs and comparative capacity against its peers. VIGI is not overly concentrated; 37% of assets are successful nan apical 10. I be aware investors that astir 17% of nan ETF is invested successful stocks retired of Canada - that marketplace tin beryllium peculiarly volatile erstwhile commodity prices sway. Switzerland and Japan are nan adjacent 2 largest state weights.

VIGI Portfolio

VIGI Portfolio

Morningstar

Getting backmost to nan dollar communicative and really it impacts VIGI. Notice successful nan floor plan beneath that VIGI has sharply underperformed large-cap US stocks successful nan past month-plus arsenic nan DXY has bounced. I americium cautious astir VIGI until we spot nan dollar beryllium that this latest uptick is conscionable temporary. But looking retired a fewer months, I spot a agelong play unfolding. Read on.

VIGI Underperforming nan S&P 500 As The Dollar Bounces

VIGI Underperforming nan S&P 500 As The Dollar Bounces

Stockcharts.com

What astir nan VIGI method floor plan itself? I spot immoderate imaginable upside present arsenic it is undergoing a bearish to bullish reversal. If value breaks supra nan $75 level, past a measured move value nonsubjective to $90 is successful play - that is adjacent nan all-time precocious from precocious 2021. We besides person nan 200-day moving mean astir to move affirmative aft a important measurement spike during its latest rally. The bears tin constituent to a very humble antagonistic RSI divergence connected nan astir caller rebound high, however. I deliberation location is much upside apt than important downside, but a grade of patience is prudent correct now.

VIGI: Bearish to Bullish Reversal, Price Objective to $90 On A Close > $75

 Bearish to Bullish Reversal, Price Objective to $90 On A Close > $75

Stockcharts.com

The Bottom Line

I for illustration VIGI semipermanent for its debased costs and tradeability for those seeking non-US dividend growers. For now, though, my play would beryllium to hold for a adjacent supra $75 earlier getting agelong aliases adding nan position, truthful I americium a hold. The US dollar's moves will beryllium captious to really VIGI goes from here.

This article was written by

Mike Zaccardi, CFA, CMT floor plan picture

Freelance Financial Writer astatine SoFi & Ally | Investments | Markets | Personal Finance | RetirementI create written contented utilized successful various formats including blogs, emails, achromatic papers, and societal media for financial advisors and finance firms successful a cost-efficient way. My passion is putting a communicative to financial data. Working pinch teams that see elder editors, finance strategists, trading managers, information analysts, and executives, I lend ideas to thief make contented relevant, accessible, and measurable. Having expertise successful thematic investing, marketplace events, customer education, and compelling finance outlooks, I subordinate to mundane investors successful a pithy way. I bask analyzing banal marketplace sectors, ETFs, economical data, and wide marketplace conditions, past producing snackable contented for various audiences. Macro drivers of plus classes specified arsenic stocks, bonds, commodities, currencies, and crypto excite me. I genuinely bask communicating finance pinch an acquisition and imaginative style. I besides judge successful producing evidence-based narratives utilizing empirical information to thrust location points. Charts are 1 of nan galore devices I leverage to show a communicative successful a elemental but engaging way. I attraction connected SEO and circumstantial style guides erstwhile appropriate. My CFA and CMT backgrounds show prowess successful finance guidance and my master acquisition includes extended nationalist speaking and communication. Moreover, my extended assemblage school and master trading acquisition supply useful skills. Past roles besides see dense usage of Excel modeling and floor plan creation arsenic good arsenic PowerPoint.I americium a contributor to The Dividend Freedom Tribe.

Disclosure: I/we person nary stock, action aliases akin derivative position successful immoderate of nan companies mentioned, and nary plans to initiate immoderate specified positions wrong nan adjacent 72 hours. I wrote this article myself, and it expresses my ain opinions. I americium not receiving compensation for it (other than from Seeking Alpha). I person nary business narration pinch immoderate institution whose banal is mentioned successful this article.

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