The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Vanguard High Dividend Yield Index Fund ETF Shares (VYM) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and VYM is a Vanguard Large Value fund. So, what’s the difference between VB and VYM? And which fund is better?
The expense ratio of VB is 0.01 percentage points lower than VYM’s (0.05% vs. 0.06%). VB also has a higher exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than VYM over the past ten years.
In this article, we’ll compare VB vs. VYM. We’ll look at annual returns and portfolio growth, as well as at their industry exposure and performance. Moreover, I’ll also discuss VB’s and VYM’s fund composition, holdings, and risk metrics and examine how these affect their overall returns.
Summary
| VB | VYM | |
| Name | Vanguard Small-Cap Index Fund ETF Shares | Vanguard High Dividend Yield Index Fund ETF Shares |
| Category | Small Blend | Large Value |
| Issuer | Vanguard | Vanguard |
| AUM | 137.72B | 48.5B |
| Avg. Return | 14.25% | 12.20% |
| Div. Yield | 1.14% | 2.79% |
| Expense Ratio | 0.05% | 0.06% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.05%.
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%.
VB’s dividend yield is 1.65% lower than that of VYM (1.14% vs. 2.79%). Also, VB yielded on average 2.06% more per year over the past decade (14.25% vs. 12.20%). The expense ratio of VB is 0.01 percentage points lower than VYM’s (0.05% vs. 0.06%).
Fund Composition
Industry Exposure
| VB | VYM | |
| Technology | 16.85% | 9.77% |
| Industrials | 16.11% | 10.14% |
| Energy | 3.67% | 7.12% |
| Communication Services | 2.4% | 5.91% |
| Utilities | 2.19% | 7.27% |
| Healthcare | 14.34% | 13.61% |
| Consumer Defensive | 4.14% | 14.13% |
| Real Estate | 9.56% | 0.02% |
| Financial Services | 13.06% | 22.05% |
| Consumer Cyclical | 13.03% | 5.57% |
| Basic Materials | 4.63% | 4.41% |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
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%.
VB is 7.08% more exposed to the Technology sector than VYM (16.85% vs 9.77%). VB’s exposure to Industrials and Healthcare stocks is 5.97% higher and 0.73% higher respectively (16.11% vs. 10.14% and 14.34% vs. 13.61%). In total, Communication Services, Energy, and Consumer Defensive also make up 16.95% less of the fund’s holdings compared to VYM (10.21% vs. 27.16%).
Holdings
| VB Holdings | Weight |
| Charles River Laboratories International Inc | 0.34% |
| Pool Corp | 0.32% |
| Bio-Techne Corp | 0.32% |
| Avantor Inc | 0.32% |
| PerkinElmer Inc | 0.31% |
| Diamondback Energy Inc | 0.31% |
| VICI Properties Inc Ordinary Shares | 0.3% |
| IDEX Corp | 0.3% |
| Entegris Inc | 0.3% |
| Novavax Inc | 0.29% |
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
| 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
| VB | VYM | |
| Mean Return | 1.15 | 1.04 |
| R-squared | 85.03 | 88.88 |
| Std. Deviation | 17.82 | 12.69 |
| Alpha | -4.02 | -0.7 |
| Beta | 1.21 | 0.88 |
| Sharpe Ratio | 0.74 | 0.93 |
| Treynor Ratio | 10.15 | 13.24 |
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Sharpe Ratio of 0.74 with a R-squared of 85.03 and a Mean Return of 1.15. Its Beta is 1.21 while VB’s Alpha is -4.02. Furthermore, the fund has a Treynor Ratio of 10.15 and a Standard Deviation of 17.82.
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Beta of 0.88 with a Sharpe Ratio of 0.93 and a Standard Deviation of 12.69. Its R-squared is 88.88 while VYM’s Treynor Ratio is 13.24. Furthermore, the fund has a Mean Return of 1.04 and a Alpha of -0.7.
VB’s Mean Return is 0.11 points higher than that of VYM and its R-squared is 3.85 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than VYM. The Alpha and Beta of VB are 3.32 points lower and 0.33 points higher than VYM’s Alpha and Beta.
Performance
Annual Returns
| Year | VB | VYM |
| 2020 | 19.08% | 1.14% |
| 2019 | 27.37% | 24.2% |
| 2018 | -9.3% | -5.87% |
| 2017 | 16.24% | 16.42% |
| 2016 | 18.31% | 16.87% |
| 2015 | -3.65% | 0.33% |
| 2014 | 7.51% | 13.47% |
| 2013 | 37.8% | 30.26% |
| 2012 | 18.22% | 12.68% |
| 2011 | -2.68% | 10.5% |
| 2010 | 27.89% | 14.17% |
VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VB | $10,000 | $39,734 | 14.25% |
| VYM | $10,000 | $33,914 | 12.20% |
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
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%.
VB’s CAGR is 2.06 percentage points higher than that of VYM and as a result, would have yielded $5,820 more on a $10,000 investment. Thus, VB outperformed VYM by 2.06% annually.
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