The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the Vanguard High Dividend Yield Index Fund ETF Shares (VYM) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and VYM is a Vanguard Large Value fund. So, what’s the difference between VO and VYM? And which fund is better?
The expense ratio of VO is 0.02 percentage points lower than VYM’s (0.04% vs. 0.06%). VO also has a higher exposure to the technology sector and a higher standard deviation. Overall, VO has provided higher returns than VYM over the past ten years.
In this article, we’ll compare VO vs. VYM. We’ll look at performance and portfolio growth, as well as at their annual returns and fund composition. Moreover, I’ll also discuss VO’s and VYM’s industry exposure, risk metrics, and holdings and examine how these affect their overall returns.
Summary
| VO | VYM | |
| Name | Vanguard Mid-Cap Index Fund ETF Shares | Vanguard High Dividend Yield Index Fund ETF Shares |
| Category | Mid-Cap Blend | Large Value |
| Issuer | Vanguard | Vanguard |
| AUM | 154.08B | 48.5B |
| Avg. Return | 14.34% | 12.20% |
| Div. Yield | 1.23% | 2.79% |
| Expense Ratio | 0.04% | 0.06% |
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
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%.
VO’s dividend yield is 1.56% lower than that of VYM (1.23% vs. 2.79%). Also, VO yielded on average 2.14% more per year over the past decade (14.34% vs. 12.20%). The expense ratio of VO is 0.02 percentage points lower than VYM’s (0.04% vs. 0.06%).
Fund Composition
Industry Exposure
| VO | VYM | |
| Technology | 22.01% | 9.77% |
| Industrials | 11.92% | 10.14% |
| Energy | 3.82% | 7.12% |
| Communication Services | 5.61% | 5.91% |
| Utilities | 5.12% | 7.27% |
| Healthcare | 13.03% | 13.61% |
| Consumer Defensive | 3.25% | 14.13% |
| Real Estate | 8.67% | 0.02% |
| Financial Services | 11.08% | 22.05% |
| Consumer Cyclical | 12.12% | 5.57% |
| Basic Materials | 3.36% | 4.41% |
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
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%.
VO is 12.24% more exposed to the Technology sector than VYM (22.01% vs 9.77%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.58% lower and 6.55% higher respectively (13.03% vs. 13.61% and 12.12% vs. 5.57%). In total, Basic Materials, Energy, and Utilities also make up 6.50% less of the fund’s holdings compared to VYM (12.30% vs. 18.80%).
Holdings
| VO Holdings | Weight |
| IDEXX Laboratories Inc | 0.78% |
| DocuSign Inc | 0.75% |
| Marvell Technology Inc | 0.68% |
| IQVIA Holdings Inc | 0.68% |
| Chipotle Mexican Grill Inc | 0.63% |
| Veeva Systems Inc Class A | 0.62% |
| Digital Realty Trust Inc | 0.62% |
| Centene Corp | 0.62% |
| Aptiv PLC | 0.62% |
| Carrier Global Corp Ordinary Shares | 0.61% |
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
| 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
| VO | VYM | |
| Mean Return | 1.14 | 1.04 |
| R-squared | 92.22 | 88.88 |
| Std. Deviation | 15.65 | 12.69 |
| Alpha | -2.71 | -0.7 |
| Beta | 1.11 | 0.88 |
| Sharpe Ratio | 0.83 | 0.93 |
| Treynor Ratio | 11.32 | 13.24 |
The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Treynor Ratio of 11.32 with a Standard Deviation of 15.65 and a Beta of 1.11. Its Mean Return is 1.14 while VO’s Sharpe Ratio is 0.83. Furthermore, the fund has a R-squared of 92.22 and a Alpha of -2.71.
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Treynor Ratio of 13.24 with a Beta of 0.88 and a R-squared of 88.88. Its Alpha is -0.7 while VYM’s Standard Deviation is 12.69. Furthermore, the fund has a Mean Return of 1.04 and a Sharpe Ratio of 0.93.
VO’s Mean Return is 0.10 points higher than that of VYM and its R-squared is 3.34 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than VYM. The Alpha and Beta of VO are 2.01 points lower and 0.23 points higher than VYM’s Alpha and Beta.
Performance
Annual Returns
| Year | VO | VYM |
| 2020 | 18.22% | 1.14% |
| 2019 | 31.04% | 24.2% |
| 2018 | -9.21% | -5.87% |
| 2017 | 19.25% | 16.42% |
| 2016 | 11.23% | 16.87% |
| 2015 | -1.34% | 0.33% |
| 2014 | 13.76% | 13.47% |
| 2013 | 35.15% | 30.26% |
| 2012 | 15.98% | 12.68% |
| 2011 | -1.96% | 10.5% |
| 2010 | 25.57% | 14.17% |
VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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 |
| VO | $10,000 | $40,404 | 14.34% |
| VYM | $10,000 | $33,914 | 12.20% |
A $10,000 investment in VO would have resulted in a final balance of $40,404. This is a profit of $30,404 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
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%.
VO’s CAGR is 2.14 percentage points higher than that of VYM and as a result, would have yielded $6,490 more on a $10,000 investment. Thus, VO outperformed VYM by 2.14% annually.
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