Vanguard International Dividend Appreciation Index Fund Admiral Shares VIAAX

Vanguard International Dividend Appreciation holds profitable firms with consistent dividend growth that should offer attractive long-term performance. Its focus is on stable firms that insulate the portfolio from volatility and should lead to a long-term risk-adjusted advantage.

This fund tracks the S&P Global Ex-U.S. Dividend Growers Index, which targets large- and mid-cap stocks from developed and emerging markets that have increased their dividend payments for at least seven consecutive years. It eliminates the highest-yielding names from that cohort to avoid distressed stocks. That should ensure its holdings are financially stable and more likely to continue making dividend payments. The index weights its holdings by free-float-adjusted market cap to help mitigate turnover and trading costs. It also limits individual stocks to 4% of the portfolio at the annual rebalance to improve diversification.

Targeting stocks with seven years of dividend growth is a strict hurdle that provides a big advantage. It indirectly targets profitable companies that not only have the capacity to make dividend payments but also a willingness to do so. However, the strategy doesn’t consider other metrics, such as debt levels and analyst earnings growth estimates, which may be indicative of a firm’s capacity to continue making payments. Additionally, if a company were to miss a single dividend payment, it must wait seven years before it is welcomed back.

Overseas companies that have a history of increasing their dividend payments are likely becoming more profitable as well. These stable businesses should be less volatile than the broader market and hold up better during downturns. For example, this fund outperformed the MSCI ACWI Ex USA Growth Index by 5 percentage points in 2022, when the index declined by 22 percentage points.

The fund’s low expense ratio ranks among the cheapest in the category and should provide a long-term advantage. That edge grew after Vanguard cut its fee by 5 basis points to 0.10%. While annual fees are cheap, buyers of this strategy's mutual fund share classes are subject to a 0.25% purchase fee intended to minimize the impact of transaction costs on the fund. This benefits current fundholders at the expense of new investors. The exchange-traded fund version of this strategy is not subject to the purchase fee.

This portfolio comprises profitable, stable companies. Collectively, they should provide strong index-relative performance while managing the risks associated with dividend investing. The fund earns a High Process Pillar rating.

Vanguard’s portfolio managers fully replicate the S&P Global Ex-U.S. Dividend Growers Index. This benchmark starts with all stocks in the S&P Global ex US Broad Market Index, which includes companies listed in both developed and emerging markets. The process excludes REITs and firms that are currently working through bankruptcy proceedings and applies additional liquidity screens to ensure potential holdings are investable. The methodology further narrows its selection to companies that have at least a seven-year history of increasing regular cash dividend payments.

The strategy sorts stocks by their indicated dividend yield and eliminates those that land in the top 25%, or 15% for existing constituents. These criteria should eliminate stocks that are most likely to cut their dividends, allowing the fund to maintain a tight focus on names that will continue growing dividends in the future. The index weights constituents by their float-adjusted market cap, subject to a 4% maximum weighting at the time of a rebalance. The index reconstitutes annually in March and splits its trading activity across three days to reduce the market impact costs of trading.

The stocks in this portfolio tend to have shareholder-friendly management. They not only have the capacity to increase dividend payments but also the willingness to do so. These firms typically trade at higher multiples than the market. An acute emphasis on dividend growth also means this fund’s yield tends to run lower than the broader foreign stock market.

Focusing on dividend growth causes the portfolio to hold more stocks from stable sectors like healthcare and consumer defensive than its category index, with proportionally smaller stakes in consumer cyclical and communication services.

Market-cap weighting emphasizes the largest names in the portfolio. Top holdings include major multinational companies like Novartis and Nestlé. These companies tend to be less volatile than the broader market and may hold up better during market downturns. Market-cap weighting also promotes low turnover and associated trading costs. On average, this fund’s turnover has been less than half of its average category peer.

This fund’s exposure to emerging-markets companies dropped significantly since 2021, going from 25% of the portfolio to 7% in September 2025. The biggest cuts were to Chinese and Indian stocks. While this reduces exposure to political and regulatory risks in the near term, some of these firms may regain eligibility several years down the road once they stabilize.

Vanguard's equity index group earns an Above Average People Pillar rating for its well-supported and stable management team that's adept at leveraging Vanguard's comprehensive resources.

Its portfolio managers benefit from the firm's global infrastructure and advanced portfolio-management technology, which facilitates cost-efficient trading around the globe. The infrequent turnover of managers, coupled with Vanguard's practice of rotating them across various funds, enhances their expertise and understanding of different market segments.

The fund's managers directly handle trading, providing them with deeper insights into the portfolio's operations than a stand-alone trader might have. They are backed by a global team of dedicated personnel and employ sophisticated, scalable technology to minimize their workload and enhance tracking accuracy. Vanguard's independent risk-management team plays a crucial role in ensuring its funds adhere to predetermined tracking tolerances. It collaborates closely with the managers to oversee trades and address potential issues proactively. Vanguard compensates managers based on tracking error and excess return metrics to foster a culture of accountability and ensure that the management team's interests are closely tied to investors'.

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

The fund's low-volatility portfolio helped it navigate a challenging few years for global stocks. It beat the MSCI ACWI ex USA Growth Index by over 2 percentage points annualized over the five years through August 2025, with lower volatility to boot.

But a portfolio of stable companies can lag during rallies. This fund held up similarly to the MSCI ACWI ex USA Growth Index during the coronavirus-driven selloff, yet it lagged by nearly 8 percentage points from April through December 2020, over which time, the index gained 50%.

Stability has buoyed performance amid market turmoil in recent years. The fund carved out a 5-percentage-point advantage over its bogy during the downturn in 2022. Over the past five years, the fund has captured 84% of the category index's downside with shallower drawdowns while managing to retain 97% of the index's upside, a worthwhile trade-off for investors.

Vanguard Intl Div Apprec Idx Adm's Prospectus Adjusted Expense Ratio is 0.16% per year. It places it in the cheapest quintile of the Morningstar US Fund Foreign Large Growth Category, where the median fee is 0.9% per year. This cost positioning translates into a Medalist Rating Price Score of 2.46, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.