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Vanguard Dividend Growth Reopens

Investors can now buy into one of the large-cap blend category's most reliable--and exceptional--funds.

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Vanguard Dividend Growth Inv

As of Aug. 1, 2019, Vanguard Dividend Growth VDIGX is available to new investors for the first time since its July 28, 2016, closure. The fund’s reopening has no impact on its Morningstar Analyst Rating of Gold, but it does present an opportunity to buy into one of the large-blend Morningstar Category’s most reliable options.

Under longtime manager Donald Kilbride, the fund’s 40- to 50-stock portfolio has repeatedly proven its worth in falling markets. During late 2018’s near bear market, for example, the fund’s 14.5% peak-to-trough loss was 2.5 percentage points better than the NASDAQ U.S. Dividend Achievers Select Index and 95% of peers. Nor has the fund fallen behind in the market’s subsequent rebound, and it maintains an edge over the benchmark and nearly 90% of peers over the past three years through July 2019.

Despite performing well since its closure, investors have pulled $7.1 billion in assets from the fund. While its $36.6 billion asset base is bigger in an absolute sense than when the fund closed to investors, it is smaller by about one fifth relative to the market appreciation of the stocks in the NASDAQ U.S. Dividend Achievers Select Index. Moreover, Kilbride’s strategy is built for scale. He has always trafficked in liquid, large-cap names and there isn’t a position in the current portfolio that would take more than three days to exit based on average daily trading volumes over the prior year. The fund, in short, can handle more money and investors who have been on the outside looking in, should consider it.

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About the Author

Alec Lucas

Director of Manager Research
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Alec Lucas is director of manager research, active funds research, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is a voting member of the Morningstar Medalist Ratings Committee for U.S. and international fixed-income strategies, covers fixed-income strategies from asset managers such as Baird and American Funds.

Lucas is also active in parent research. He is a voting member of the U.S. parent ratings committee and previously served as the lead analyst for Franklin Templeton, Capital Group, and Vanguard, among other firms.

Lucas was a strategist on Morningstar's equity strategies team prior to assuming his current role in June 2022. He covered equity strategies from asset managers such as Primecap and American Funds and received the 2019 Citywire Professional Buyer Rising Star Award.

Before joining Morningstar in 2013, Lucas worked as a minister as well as a professor for Loyola University Chicago, among other institutions. From 2010 to 2011, he was a Fulbright Scholar at the University of Heidelberg.

Lucas holds bachelor's degrees in philosophy and classics from the University of Missouri-Columbia, where he graduated summa cum laude and with departmental honors, and a Master of Divinity, summa cum laude, from Trinity International University. He also holds a doctorate in theology, with distinction, from Loyola University Chicago and has published several articles and one book within that field.

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