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VDIGX: A Great 'Hedge' Fund


  • The VDIGX has outperformed the market in both bull and bear markets.
  • It offers a triple threat of value, growth and income.
  • While the fund is closed, I recommend closely following their holdings.

Thesis Summary

With the imminent threat that the market is turning bearish, investors are now looking to shift their portfolio balances and hedge their investments with some defensive stocks and even precious metals. The Vanguard Dividend Growth Fund Investor Shares Inv (MUTF:VDIGX) offers a nicely balanced portfolio that has a track record of outperforming in bear markets. The mix of blue-chip value companies together with the dividend makes it a winner in my book.


The first thing we must know about the VDIGX is that this is a closed fund. Therefore, no new investors can enter the fund at the moment. Furthermore, it is an actively managed fund, which means it does change its composition over time. However, this does not mean we can’t see what investments this fund is making and replicate it ourselves. It is a shame, though, since Vanguard funds are usually very competitive in terms of fees. Nonetheless, let’s take a look at the holdings and see how they have performed.


Source: Ycharts

The list above shows the top 25 holdings of the fund. As we can see, the fund is filled with classic household nomes: Coca-Cola Co (KO). McDonald’s Corp (MCD), Johnson & Johnson (JNJ), Nike Inc (NKE), etc.

From a value investing perspective, the fund is filled with classic value plays. A company such as coca-cola or McDonald0s will continue to make money probably long after we are dead. However, the fund also has some interesting plays, which have helped it outperform the market in the last 10 years.

Firstly, let’s talk about industry distribution. The fund’s top investment is in Industrials, closely followed by healthcare, both around 20% of the portfolio. Needless to say, healthcare will be a great sector to be in for the foreseeable future. Little is more valuable to humans than life itself, and technology is giving

This article was written by

James Foord profile picture
Macro, crypto, commodities, international equities and so much more.

James Foord is an economist and financial writer with over five years of experience writing about stocks and crypto. His lifelong interest in monetary policy and innovative technologies led him to specialize in macroeconomics, crypto and technology. Given the current macro outlook, he is focused on commodities, real assets, international equities and value stocks.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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