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Vanguard to Launch Active Dividend Growth Fund

By Jeff Berman

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What You Need to Know

  • The Vanguard International Dividend Growth Fund will have an expense ratio of 0.54% when it launches in Q4.
  • The active fund will have just one share class, with a minimum initial investment of $3,000.
  • The fund will be advised by Wellington Management and managed by Peter Fisher, who also co-manages the Vanguard Dividend Growth Fund.

Vanguard is adding an actively managed equity fund to its lineup that seeks to compound wealth over the long term by investing in international companies with sustainably growing dividends, the firm said Friday.

The company expects the Vanguard International Dividend Growth Fund will become available for investors in the fourth quarter, with an expense ratio of 0.54%, it said.

The fund will have just one share class, with a minimum initial investment of $3,000, Vanguard said in a news release

The new fund will be managed by the same investment team, from Wellington Management Company, that managed the Vanguard Dividend Growth Fund.

Vanguard reopened its $36.6 billion Vanguard Dividend Growth Fund (VDIGX) in 2019 to all investors. It had closed the fund to most new accounts in July 2016, seeking to protect the interests of existing shareholders by reducing cash flow after a period of rapid growth.

Wellington is Vanguard’s largest and longest-serving external advisor. From the day Vanguard was founded, Wellington has been managing client assets on behalf of the Vanguard funds. As of June 30, Wellington oversaw more than $405 billion of Vanguard fund assets globally, according to Vanguard.

The fund will be advised by Wellington Management and managed by Peter Fisher, who also co-manages the Vanguard Dividend Growth Fund with portfolio manager Don Kilbride.

Vanguard has a long-established relationship with Fisher and Wellington’s Dividend Growth team and said it is “confident that the team’s proven investment process and philosophy will translate well to international stocks.”

The International Dividend Growth Fund’s portfolio manager will “construct a high-conviction portfolio of companies with strong balance sheets and high, sustainable free cash flows,” according to Vanguard.

The portfolio manager will select companies expected to sustainably grow their dividends over the long term, Vanguard said.

“Investors can use the International Dividend Growth Fund as a meaningful component of their international equity holdings, and it can be paired with the U.S.-focused Dividend Growth Fund to build a globally diversified, actively managed equity allocation,” according to Dan Reyes, global head of Vanguard’s Portfolio Review Department.

Photo: Bloomberg.

Jeff Berman

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