Underrated ETFs Worth Considering
In the vast landscape of U.S. ETFs, the perception of “underrated” can vary significantly among investors. Some see undervalued funds as those that are performing well yet lack the attention they deserve. Others consider large, reputable funds that are still flying under the radar.
Vanguard International High Dividend ETF (VYMI)
One fund that fits this description is the Vanguard International High Dividend ETF (VYMI). This $19.5 billion ETF, which recently celebrated its 10th anniversary, is emerging as a leader in its category, despite not receiving widespread recognition.
Performance and Dividend Yield
Typically, investors may believe that chasing dividends leads to periods of subpar performance. However, VYMI dispels this notion by outperforming both the S&P 500 and various international ETFs this year. The fund tracks the FTSE All-World ex-US High Dividend Yield index, boasting a 3.5% dividend yield without exposing investors to excessive risk.
Experts argue that VYMI effectively balances quality high-dividend stocks, avoiding the typical pitfalls associated with yield traps, thanks to its selection criteria, which eliminates half of the dividend payers from consideration.
Key Features of VYMI
- Low Expense Ratio: At 0.07%, the management fees are significantly lower compared to others in the international dividend category.
- Diverse Holdings: VYMI features a broad array of 1,565 holdings, primarily in quality stocks, minimizing the risk of dividend cuts.
Additional Benefits
In a market saturated with domestic tech stocks, VYMI provides a smart alternative by diversifying into international value strategies. With only 5.4% of its portfolio in tech, the ETF predominantly invests in financial services and industrials, sectors that drive payout growth globally.
Overall, VYMI combines performance, prudent stock selection, and low costs, making it an ideal candidate for income-focused investors looking for international exposure.
