IJR vs. VYM: What’s The Difference?

The iShares Core S&P Small-Cap ETF (IJR) and the Vanguard High Dividend Yield Index Fund ETF Shares (VYM) are both among the Top 100 ETFs. IJR is a iShares Small Blend fund and VYM is a Vanguard Large Value fund. So, what’s the difference between IJR and VYM? And which fund is better?

IJR and VYM have the same expense ratio: 0.06%. IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided higher returns than VYM over the past ten years.

In this article, we’ll compare IJR vs. VYM. We’ll look at portfolio growth and industry exposure, as well as at their risk metrics and holdings. Moreover, I’ll also discuss IJR’s and VYM’s annual returns, fund composition, and performance and examine how these affect their overall returns.

Summary

IJR VYM
Name iShares Core S&P Small-Cap ETF Vanguard High Dividend Yield Index Fund ETF Shares
Category Small Blend Large Value
Issuer iShares Vanguard
AUM 68.64B 48.5B
Avg. Return 13.97% 12.20%
Div. Yield 0.96% 2.79%
Expense Ratio 0.06% 0.06%

The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% with an expense ratio of 0.06%.

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.

IJR’s dividend yield is 1.83% lower than that of VYM (0.96% vs. 2.79%). Also, IJR yielded on average 1.77% more per year over the past decade (13.97% vs. 12.20%). IJR and VYM have the same expense ratio: 0.06%.

Fund Composition

Industry Exposure

IJR vs. VYM - Industry Exposure

IJR VYM
Technology 14.32% 9.77%
Industrials 17.31% 10.14%
Energy 4.0% 7.12%
Communication Services 2.59% 5.91%
Utilities 1.8% 7.27%
Healthcare 11.55% 13.61%
Consumer Defensive 4.01% 14.13%
Real Estate 9.55% 0.02%
Financial Services 15.91% 22.05%
Consumer Cyclical 13.61% 5.57%
Basic Materials 5.34% 4.41%

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has the most exposure to the Financial Services sector at 22.05%. This is followed by Consumer Defensive and Healthcare at 14.13% and 13.61% respectively. Basic Materials (4.41%), Consumer Cyclical (5.57%), and Communication Services (5.91%) only make up 15.89% of the fund’s total assets.

VYM’s mid-section with moderate exposure is comprised of Energy, Utilities, Technology, Industrials, and Healthcare stocks at 7.12%, 7.27%, 9.77%, 10.14%, and 13.61%.

IJR is 7.17% more exposed to the Industrials sector than VYM (17.31% vs 10.14%). IJR’s exposure to Financial Services and Technology stocks is 6.14% lower and 4.55% higher respectively (15.91% vs. 22.05% and 14.32% vs. 9.77%). In total, Communication Services, Energy, and Consumer Defensive also make up 16.56% less of the fund’s holdings compared to VYM (10.60% vs. 27.16%).

Holdings

IJR - Holdings

IJR Holdings Weight
BlackRock Cash Funds Treasury SL Agency 1.08%
GameStop Corp Class A 0.86%
Omnicell Inc 0.61%
Stamps.com Inc 0.58%
Saia Inc 0.57%
Power Integrations Inc 0.57%
Exponent Inc 0.54%
NeoGenomics Inc 0.53%
Chart Industries Inc 0.53%
Macy’s Inc 0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

VYM - Holdings

VYM Holdings Weight
JPMorgan Chase & Co 3.53%
Johnson & Johnson 3.28%
The Home Depot Inc 2.59%
Procter & Gamble Co 2.48%
Bank of America Corp 2.35%
Exxon Mobil Corp 2.02%
Comcast Corp Class A 1.96%
Verizon Communications Inc 1.75%
Intel Corp 1.71%
Cisco Systems Inc 1.69%

VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.

Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.

Risk Analysis

IJR VYM
Mean Return 1.21 1.04
R-squared 76.03 88.88
Std. Deviation 18.68 12.69
Alpha -3.7 -0.7
Beta 1.2 0.88
Sharpe Ratio 0.74 0.93
Treynor Ratio 10.77 13.24

The iShares Core S&P Small-Cap ETF (IJR) has a Mean Return of 1.21 with a Sharpe Ratio of 0.74 and a Alpha of -3.7. Its Beta is 1.2 while IJR’s Standard Deviation is 18.68. Furthermore, the fund has a R-squared of 76.03 and a Treynor Ratio of 10.77.

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Mean Return of 1.04 with a Beta of 0.88 and a Sharpe Ratio of 0.93. Its Standard Deviation is 12.69 while VYM’s Alpha is -0.7. Furthermore, the fund has a R-squared of 88.88 and a Treynor Ratio of 13.24.

IJR’s Mean Return is 0.17 points higher than that of VYM and its R-squared is 12.85 points lower. With a Standard Deviation of 18.68, IJR is slightly more volatile than VYM. The Alpha and Beta of IJR are 3.00 points lower and 0.32 points higher than VYM’s Alpha and Beta.

Performance

Annual Returns

IJR vs. VYM - Annual Returns

Year IJR VYM
2020 11.24% 1.14%
2019 22.79% 24.2%
2018 -8.43% -5.87%
2017 13.2% 16.42%
2016 26.49% 16.87%
2015 -2.0% 0.33%
2014 5.67% 13.47%
2013 41.36% 30.26%
2012 16.28% 12.68%
2011 0.9% 10.5%
2010 26.14% 14.17%

IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% respectively.

The year 2013 was the strongest year for VYM, returning 30.26% on an annual basis. The poorest year for VYM in the last ten years was 2018, with a yield of -5.87%. Most years the Vanguard High Dividend Yield Index Fund ETF Shares has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 12.68%, 13.47%, and 14.17% respectively.

Portfolio Growth

IJR vs. VYM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $38,800 13.97%
VYM $10,000 $33,914 12.20%

A $10,000 investment in IJR would have resulted in a final balance of $38,800. This is a profit of $28,800 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

With a $10,000 investment in VYM, the end total would have been $33,914. This equates to a $23,914 profit over 11 years and a compound annual growth rate (CAGR) of 12.20%.

IJR’s CAGR is 1.77 percentage points higher than that of VYM and as a result, would have yielded $4,886 more on a $10,000 investment. Thus, IJR outperformed VYM by 1.77% annually.


Current recommendations:

Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:

P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!

1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!

2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply