Vanguard Dividend Growth Fund (VDIGX): Best Kip 25 Fund

Always known for its Index Funds, Vanguard also offers variety of low cost actively managed funds. Some of these funds are also among the leader and best fund in its class. The following Vanguard Dividend Growth fund is among one of these best funds offered by Vanguard. This fund is advised by Wellington Management Company LLP. This Vanguard fund also received various awards such as Best fund in Kiplinger 2011 fund list, featured in The Independent Adviser for Vanguard Investors, 5 stars rating from S&P, 5 stars rating from Morningstar.

This Vanguard Dividend Growth fund is also categorized as US Domestic Large Blend stock fund. Rule of thumb is to have about 20-30% of asset in the US Domestic stock fund. You can also invest in variety of large cap mutual fund in Kip 25 list such as Fidelity Contrafund, Primecap Odyssey Growth, Dodge & Cox Stock, T Rowe Price Equity Income, and BBH Core Select. Details about the fund information, performance, characteristics, class, fees, etc can be found below.

Vanguard Dividend Growth Inv (Ticker: VDIGX)

The Vanguard Dividend Growth fund is to provide a growing stream of income over time. The fund’s secondary objective is providing capital appreciation and current income. The fund manager teams focus the investment on high-quality companies as they invest primarily in stocks that tend to offer current dividends. The fund’s management believes those companies have long-term total returns prospects. Also, these companies usually will grow earnings and are willing to increase the dividends over time.

VDIGX Fund Profile

• Fund Inception Date: May 1992
• Ticker Symbol: VDIGX
• CUSIP: 921908604
• Net Assets: $5.7 billion 
• Beta (3yr): 0.80
• Rank in category: 54
• Category: Large Blend
• Yield: 1.75%
• Capital Gains: N/A
• Number of Years Up: 12 years
• Number of Years Down: 4 years

The fund manager for this Vanguard fund is Donald J. Kilbride. He has managed this fund since February 2006. Should you be interested to invest in this fund, the minimum balance to invest in either brokerage or IRA account is $3,000 with $100 minimum subsequent investment. This fund has no sales-load fee and no 12b1 fee. The annual expense ratio is 0.34% and the average expense ratio in the category is 1.13%.
The performance of this fund is:

• 1-year: 15.50%
• 3-year: 4.07%
• 5-year: 5.71%
• 10-year: 2.87%

This domestic stock fund has 4-stars rating from Morningstar. As May 2011, it has 8.69% year-to-date return. This fund has recorded its best performance return in 2003 with 29.20%. The worst performance occurred in 2008 with -25.57%.

VDIGX can be purchased from 81 brokerages include JP Morgan, Vanguard NTF, Royal Alliance, Raymond James, Sun Life CPS, Firstrade, ETrade No Load Fee, Pershing FundCenter, TD Ameritrade, Inc., CommonWealth PPS, Schwab RPS SDE, T. Rowe Price, etc. Vanguard has a total of 30 funds in the large blend category. The best way to invest in Vanguard funds is to open Vanguard brokerage account. Investor also can invest in Vanguard exchange traded funds (Vanguard ETF) for free. More details on my previous article.

The 10 largest holdings for the first quarter as of March 2011 are Automatic Data Processing Inc (3.5%), Exxon Mobil Corp (3.4%), Pfizer Inc (3.1%), BG Group plc (2.9%), PepsiCo Inc (2.9%), Western Union Co (2.8%), Medtronic Inc (2.8%), International Business Machines Corp (2.7%), General Dynamics Corp (2.7%), and Cardinal Health Inc. (2.7%). These top 10 holdings are equal to 29.5% of the total net assets. The annual holdings turnover as per November 2010 is 17.00%, while the average turnover in the Large Blend category is 69.01%. The top six sectors include Health Care (16.7%), Consumer Staples (15.3%), Industrials (15.2%), Information Technology (15.2%), Energy (13.2%) and Consumer Discretionary (9.1%).

Investing in mutual fund always involves primary investment risks:

• Stock market risk
• Manager risk
• Investment style risk

Goods:

• It has low expense ratio fee
• It has diversified portfolio

Disclosure: No Position