According to the latest 485A post-effective amendment (a tentative prospectus) filed for the fund, the fund will be based on a "Dividend Achievers Select Index" provided by Mergent. According to Vanguard, "The Fund's investment in the index will be within the capitalization range of the companies included in the Dividend Achievers Select Index ($198 million to $378 billion as of February 28, 2006)."
This implies that the index is similar to Mergent’s Broad Dividend Achievers Index which is a total market index of companies that have raised dividends for 10 or more years. The broad index is the basis for the PowerShares Dividend Achievers Portfolio (PFM).
PFM is the runt of the dividend ETF litter, with a mere $23 million in assets under management. It is unclear if this is because investors explicitly do not want broad market dividend funds or if this is merely a symptom of investors being satisfied with the existing major dividend ETFs, i.e., iShares Select Dividend Index (DVY), PowerShares High Yield Equity Dividend Achieve Portfolios (PEY), and SPDR Dividend (SDY), which have almost $7 Billion in assets combined. The success of WisdomTree’s funds depends on investor interest in total market dividend funds.
The 0.28% expense ratio of the Vanguard Dividend Appreciation VIPERs will be much cheaper than other dividend ETFs. DVY charges 0.40%, the Powershares dividend funds all charge 0.50%, the SPDR Dividend ETF charges 0.30%, and Morningstar Dividend Leaders (FDL) charges 0.45%. I think that the vanguard fund will dominate the other dividend ETFs, with the exception of PowerShares International Dividend Achievers Portfolio (PID) and SDY. PID remains the only international dividend fund. SDY is as cheap as the Vanguard fund and has a unique universe of Dividend Aristocrats that have raised dividends for at least 25 years.
I believe Powershares and other sponsors will cut expense ratios or switch to monthly dividends if investors start switching. IMHO there is no real reason for exchange traded dividend funds to charge more than 0.30%. Dividend stocks are liquid and cheap to trade on the US Exchanges. Lower expense ratios will also lead to higher yields, which is ultimately what income investors want.