LBill

International Dividend Investments Can Diversify Portfolio

Two things: First, everyone seems to ignore the fact that dividend funds have very different sector weightings than total market funds, typically overweighting financial, energy, and utilities. How much of the performance of such funds is attributable to sector weightings alone? Second, not all companies issue dividends so you are making bets on the subset of companies that do. Arnott's RAFI combines several fundamental measures in addition to dividends and does not exlude as many companies as do funds based on dividend weighting alone. Seems to me - if you believe in fundamental weighting at all - this is a more sophisticated approach.