The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Vanguard High Dividend Yield Index Fund ETF Shares (VYM) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and VYM is a Vanguard Large Value fund. So, what’s the difference between VGT and VYM? And which fund is better?
The expense ratio of VGT is 0.04 percentage points higher than VYM’s (0.1% vs. 0.06%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than VYM over the past ten years.
In this article, we’ll compare VGT vs. VYM. We’ll look at holdings and annual returns, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss VGT’s and VYM’s risk metrics, performance, and fund composition and examine how these affect their overall returns.
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Summary
| VGT | VYM | |
| Name | Vanguard Information Technology Index Fund ETF Shares | Vanguard High Dividend Yield Index Fund ETF Shares |
| Category | Technology | Large Value |
| Issuer | Vanguard | Vanguard |
| AUM | 54.13B | 48.5B |
| Avg. Return | 20.84% | 12.20% |
| Div. Yield | 0.66% | 2.79% |
| Expense Ratio | 0.1% | 0.06% |
The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
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%.
VGT’s dividend yield is 2.13% lower than that of VYM (0.66% vs. 2.79%). Also, VGT yielded on average 8.64% more per year over the past decade (20.84% vs. 12.20%). The expense ratio of VGT is 0.04 percentage points higher than VYM’s (0.1% vs. 0.06%).
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Fund Composition
Industry Exposure
| VGT | VYM | |
| Technology | 88.89% | 9.77% |
| Industrials | 1.67% | 10.14% |
| Energy | 0.0% | 7.12% |
| Communication Services | 0.61% | 5.91% |
| Utilities | 0.0% | 7.27% |
| Healthcare | 0.0% | 13.61% |
| Consumer Defensive | 0.0% | 14.13% |
| Real Estate | 0.0% | 0.02% |
| Financial Services | 8.83% | 22.05% |
| Consumer Cyclical | 0.0% | 5.57% |
| Basic Materials | 0.0% | 4.41% |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
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%.
VGT is 79.12% more exposed to the Technology sector than VYM (88.89% vs 9.77%). VGT’s exposure to Financial Services and Industrials stocks is 13.22% lower and 8.47% lower respectively (8.83% vs. 22.05% and 1.67% vs. 10.14%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 19.72% less of the fund’s holdings compared to VYM (0.00% vs. 19.72%).
Holdings
| VGT Holdings | Weight |
| Apple Inc | 19.58% |
| Microsoft Corp | 16.53% |
| NVIDIA Corp | 4.22% |
| Visa Inc Class A | 3.16% |
| PayPal Holdings Inc | 2.76% |
| Mastercard Inc Class A | 2.76% |
| Adobe Inc | 2.39% |
| Intel Corp | 1.94% |
| Salesforce.com Inc | 1.91% |
| Cisco Systems Inc | 1.9% |
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
| 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
| VGT | VYM | |
| Mean Return | 1.76 | 1.04 |
| R-squared | 74.84 | 88.88 |
| Std. Deviation | 16.61 | 12.69 |
| Alpha | 10.41 | -0.7 |
| Beta | 1.02 | 0.88 |
| Sharpe Ratio | 1.23 | 0.93 |
| Treynor Ratio | 20.55 | 13.24 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a R-squared of 74.84 with a Standard Deviation of 16.61 and a Alpha of 10.41. Its Beta is 1.02 while VGT’s Mean Return is 1.76. Furthermore, the fund has a Sharpe Ratio of 1.23 and a Treynor Ratio of 20.55.
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Treynor Ratio of 13.24 with a Alpha of -0.7 and a Beta of 0.88. Its Standard Deviation is 12.69 while VYM’s Sharpe Ratio is 0.93. Furthermore, the fund has a R-squared of 88.88 and a Mean Return of 1.04.
VGT’s Mean Return is 0.72 points higher than that of VYM and its R-squared is 14.04 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than VYM. The Alpha and Beta of VGT are 11.11 points higher and 0.14 points higher than VYM’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | VYM |
| 2020 | 45.94% | 1.14% |
| 2019 | 48.68% | 24.2% |
| 2018 | 2.52% | -5.87% |
| 2017 | 37.07% | 16.42% |
| 2016 | 13.73% | 16.87% |
| 2015 | 5.02% | 0.33% |
| 2014 | 18.01% | 13.47% |
| 2013 | 30.91% | 30.26% |
| 2012 | 14.05% | 12.68% |
| 2011 | 0.52% | 10.5% |
| 2010 | 12.74% | 14.17% |
VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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 |
| VGT | $10,000 | $72,718 | 20.84% |
| VYM | $10,000 | $33,914 | 12.20% |
A $10,000 investment in VGT would have resulted in a final balance of $72,718. This is a profit of $62,718 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.84%.
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%.
VGT’s CAGR is 8.64 percentage points higher than that of VYM and as a result, would have yielded $38,804 more on a $10,000 investment. Thus, VGT outperformed VYM by 8.64% annually.
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