WEEKLY BRIEF | Shakeup at Dividend Growth

Hello, and welcome to the IVA Weekly Brief for Wednesday, July 8.

There are no changes recommended for any of our Portfolios.

A Harsh Reminder

Investors who put all their chips on the table based solely on momentum may regret it. The first half of 2026 was a case in point. Semiconductor stocks raced higher in the first six months of the year. The iShares Semiconductor ETF (SOXX) gained 113%—but gains like that are simply not sustainable. The ETF has pulled back nearly 14% in July.

While Vanguard doesn't offer a semiconductor ETF, a similar rise and fall is most visible in Information Technology ETF (VGT), which gained 27.1% in the year’s first half and is down 4.6% this month. It also shows up in the PRIMECAP-run funds, where Micron is a top holding. Capital Opportunity (VHCOX), for example, gained 30.5% in the first six months but is down 5.2% in July.

To be clear, I'm not saying to sell Information Technology ETF or any of the PRIMECAP-run funds. What I am saying, or repeating, is that investors need to keep expectations in check. The first trading days of July are a reminder that stocks don't move in a straight line—and that even long-time winners stumble.

An Abrupt Departure

Well, that was abrupt.

Peter Fisher—who recently succeeded Don Kilbride as the head of Wellington's Dividend Growth team—is retiring at year-end. Effective immediately, however, he is no longer a portfolio manager on any of the Dividend Growth strategies.

Tim Casaletto and Tom Levering are now co-managing Dividend Growth (VDIGX), Wellington Dividend Growth Active ETF (VDIG) and Advice Select Dividend Growth (VADGX).

Casaletto has worked with Fisher since January 2025, and encouragingly, he already has between $100,000 and $500,000 invested in Dividend Growth. Levering brings a different background—he currently manages Energy Opportunities (VGENX) and has spent more than two decades focused on utilities and energy infrastructure. Casaletto spent a decade working alongside Levering before joining the Dividend Growth team, so the pairing isn't random.

I don't expect the new managers to change the fund's core approach. But given their backgrounds, could energy and utilities stocks—currently less than 3% of the Dividend Growth's portfolio—play a larger role down the road? I wouldn't rule it out.

International Dividend Growth (VIDGX) gets its own change: Silas Brown steps in as the sole portfolio manager.

The transition from Kilbride to Fisher was deliberate and had a long runway. This transition is the opposite—it’s possible their hand was forced.

What does this mean for shareholders?

If you followed my lead and sold Dividend Growth last year, you’ve already moved on. But I know many longtime IVA readers still hold Dividend Growth in a taxable account to avoid realizing a large capital gain—I've done the same. Continuing to hold for tax reasons isn't unreasonable, but this manager change strengthens the case for selling. That call ultimately depends on your tax situation.

The Dividend Growth strategies have been in a funk for several years. Maybe fresh management is just what they need. But with low-cost index alternatives like Dividend Appreciation Index (VDADX / VIG), you don't have to wait around to find out.

Keep Perspective

As I told Premium Members last week, for all the noise about SpaceX and its $2 trillion valuation landing in index funds, the rocket, satellite internet and AI giant isn’t moving the needle all that much.

SpaceX joined the Nasdaq-100 yesterday. It carries only a 1.3% weight in the Invesco QQQ ETF (QQQ), which tracks the tech-heavy index—a far cry from the roughly 3%–7.5% weights of the other trillion-dollar companies. In fact, SpaceX slots in between Palantir and KLA Corp.

The reason: Only 5% of the company’s shares are publicly available. So, index providers treat it as a $300 billion company, not the $2 trillion giant the headlines suggest—still large, just not a trillion-dollar behemoth.

SpaceX's weight could grow as more shares become available. For now, its impact on your index fund won't match the hype. The bark is bigger than the bite.

Trump Accounts Have Launched

Trump Accounts—technically, 530A accounts—are new IRA-like investment vehicles for children under 18. They launched on July 4.

Longtime IVA readers know I'm a big proponent of jump-starting a young person's savings, which is why I remind you every year that you can gift a Roth IRA to a child or grandchild. A Trump Account is a similar idea. I'll have more to say once I've done my homework—and opened one for my daughter.

For now, a couple of things worth noting.

The only investment option available in a Trump Account at launch is State Street’s SPDR Portfolio S&P 500 ETF (SPYM)—not to be confused with its more expensive and heavily-traded sibling, SPDR S&P 500 ETF (SPY).

In the coming months, the Treasury Department will expand the lineup to include Vanguard’s Total Stock Market ETF (VTI) and three other ETFs. All own only U.S. stocks and charge either 0.02% or 0.03% annually.

If you have a child born between 2025 and 2028—like my daughter—the government will seed the account with $1,000. That doesn't happen automatically; you have to open the account and request the money. It's free money, and I plan to take advantage of it.

Whether it makes sense to fund these accounts beyond that (up to $5,000 a year) or to open them for children born before 2025 is a more open question. I'll have more once I've opened one and can report from firsthand experience. 

Our Portfolios

Our Portfolios are showing solid returns for the year through Tuesday. The Aggressive Portfolio is up 14.2%, the Aggressive ETF Portfolio is up 11.2%, the Growth Portfolio is up 12.7%, the Moderate Portfolio is up 12.6% and the Conservative Portfolio is up 7.5%.

This compares to a 10.9% gain for Total Stock Market Index (VTSAX), a 12.8% return for Total International Stock Index (VTIAX), and a 0.2% gain for Total Bond Market Index (VBTLX). Vanguard’s most aggressive multi-index fund, Target Retirement 2070 (VSNVX), is up 10.6% for the year, and its most conservative, LifeStrategy 20/80 (VASIX), is up 2.7%.

IVA Research

Yesterday, I shared the second installment of a three-part series on 529 plans with Premium Members. Part one covered the basics: 529 Plans: Older and Wiser.  of 529 plans in part one—here. Part two took a closer look at “the” Vanguard 529 Plan: 529 Plans: What's in the Toolbox. Next week, I’ll discuss how I think about investing for a loved one’s college education.

Until my next IVA Weekly Brief, have a safe, sound and prosperous investment future.