VTV vs. VYM: What’s The Difference?

The Vanguard Value Index Fund ETF Shares (VTV) and the Vanguard High Dividend Yield Index Fund ETF Shares (VYM) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and VYM is a Vanguard Large Value fund. So, what’s the difference between VTV and VYM? And which fund is better?

The expense ratio of VTV is 0.02 percentage points lower than VYM’s (0.04% vs. 0.06%). VTV also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VTV has provided lower returns than VYM over the past ten years.

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

Summary

VTV VYM
Name Vanguard Value Index Fund ETF Shares Vanguard High Dividend Yield Index Fund ETF Shares
Category Large Value Large Value
Issuer Vanguard Vanguard
AUM 125.77B 48.5B
Avg. Return 12.07% 12.20%
Div. Yield 2.15% 2.79%
Expense Ratio 0.04% 0.06%

The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% 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%.

VTV’s dividend yield is 0.64% lower than that of VYM (2.15% vs. 2.79%). Also, VTV yielded on average 0.12% less per year over the past decade (12.07% vs. 12.20%). The expense ratio of VTV is 0.02 percentage points lower than VYM’s (0.04% vs. 0.06%).

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Fund Composition

Industry Exposure

VTV vs. VYM - Industry Exposure

VTV VYM
Technology 7.86% 9.77%
Industrials 12.61% 10.14%
Energy 5.59% 7.12%
Communication Services 5.49% 5.91%
Utilities 5.37% 7.27%
Healthcare 19.84% 13.61%
Consumer Defensive 10.72% 14.13%
Real Estate 3.01% 0.02%
Financial Services 22.81% 22.05%
Consumer Cyclical 3.79% 5.57%
Basic Materials 2.91% 4.41%

The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.

VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.

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%.

VTV is 0.76% more exposed to the Financial Services sector than VYM (22.81% vs 22.05%). VTV’s exposure to Healthcare and Industrials stocks is 6.23% higher and 2.47% higher respectively (19.84% vs. 13.61% and 12.61% vs. 10.14%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 0.69% less of the fund’s holdings compared to VYM (12.17% vs. 12.86%).

Holdings

VTV - Holdings

VTV Holdings Weight
Berkshire Hathaway Inc Class B 2.98%
JPMorgan Chase & Co 2.82%
Johnson & Johnson 2.6%
UnitedHealth Group Inc 2.27%
Procter & Gamble Co 1.98%
Bank of America Corp 1.91%
Exxon Mobil Corp 1.6%
Comcast Corp Class A 1.57%
Intel Corp 1.36%
Verizon Communications Inc 1.32%

VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.

Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.

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%.

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Risk Analysis

VTV VYM
Mean Return 1.05 1.04
R-squared 92.61 88.88
Std. Deviation 13.78 12.69
Alpha -1.92 -0.7
Beta 0.98 0.88
Sharpe Ratio 0.87 0.93
Treynor Ratio 11.94 13.24

The Vanguard Value Index Fund ETF Shares (VTV) has a Sharpe Ratio of 0.87 with a Standard Deviation of 13.78 and a Alpha of -1.92. Its Beta is 0.98 while VTV’s Mean Return is 1.05. Furthermore, the fund has a Treynor Ratio of 11.94 and a R-squared of 92.61.

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

VTV’s Mean Return is 0.01 points higher than that of VYM and its R-squared is 3.73 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than VYM. The Alpha and Beta of VTV are 1.22 points lower and 0.10 points higher than VYM’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. VYM - Annual Returns

Year VTV VYM
2020 2.23% 1.14%
2019 25.85% 24.2%
2018 -5.39% -5.87%
2017 17.12% 16.42%
2016 16.88% 16.87%
2015 -0.89% 0.33%
2014 13.19% 13.47%
2013 33.03% 30.26%
2012 15.19% 12.68%
2011 1.16% 10.5%
2010 14.45% 14.17%

VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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

VTV vs. VYM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $33,163 12.07%
VYM $10,000 $33,914 12.20%

A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.

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%.

VTV’s CAGR is 0.12 percentage points lower than that of VYM and as a result, would have yielded $751 less on a $10,000 investment. Thus, VTV performed worse than VYM by 0.12% annually.


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