Why does the automated index investing portfolio use VIG?
I understand the reasoning that dividends can be used to rebalance the portfolio, dividends can be more tax efficient than bonds and consistent dividend increases can indicate better company health. However, when I actually compare VIG to VTI or an S&P 500 ETF like SPY/VOO/IVV, I don't actually see a significant advantage to holding VIG over something else.
To keep things simple, I'll compare it to VTI with the S&P 500 as the benchmark for beta (volatility) and alpha (risk adjusted return). My sources are stockanalysis.com and Schwab since the former doesn't show alpha. The date of the beta and alpha data is 2025-01-31. The notable advantages I can see are lower beta (0.83 vs 1.02), slightly higher dividend yield (1.66% vs 1.22%), slightly lower PE ratio (26.27 vs 27.33) and less severe dividend decreases (see links). I see that it slightly outperformed VTI and the S&P 500 between the 2008 recession and 2014. If you look at the dividend history of VIG and VTI, they're not actually that different over the last 10 years. The notable disadvantages are a lower 10 year total return (201.35% vs 230.57%) and lower alpha (-1.02 vs -0.68). The beta difference isn't nothing, but with only 11% portfolio allocation at risk level 10 and worse risk adjusted returns, I'm not sure if keeping it is really accomplishing much.