The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between VYM and BIV? And which fund is better?
The expense ratio of VYM is 0.01 percentage points higher than BIV’s (0.06% vs. 0.05%). VYM also has a high exposure to the financial services sector while BIV is mostly comprised of AAA bonds. Overall, VYM has provided higher returns than BIV over the past ten years.
In this article, we’ll compare VYM vs. BIV. We’ll look at risk metrics and portfolio growth, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss VYM’s and BIV’s fund composition, holdings, and performance and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||Vanguard Intermediate-Term Bond Index Fund ETF Shares|
|Category||Large Value||Intermediate-Term Bond|
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%.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.
VYM’s dividend yield is 0.73% higher than that of BIV (2.79% vs. 2.06%). Also, VYM yielded on average 6.88% more per year over the past decade (12.20% vs. 5.31%). The expense ratio of VYM is 0.01 percentage points higher than BIV’s (0.06% vs. 0.05%).
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|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%|
|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%.
|BIV Bond Sectors||Weight|
BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.
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The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Sharpe Ratio of 0.93 with a Alpha of -0.7 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 Beta of 0.88 and a Mean Return of 1.04.
The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Sharpe Ratio of 0.89 with a R-squared of 95.12 and a Mean Return of 0.35. Its Standard Deviation is 4.09 while BIV’s Beta is 1.33. Furthermore, the fund has a Treynor Ratio of 2.72 and a Alpha of -0.07.
VYM’s Mean Return is 0.69 points higher than that of BIV and its R-squared is 6.24 points lower. With a Standard Deviation of 12.69, VYM is slightly more volatile than BIV. The Alpha and Beta of VYM are 0.63 points lower and 0.45 points lower than BIV’s Alpha and Beta.
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VYM had its best year in 2013 with an annual return of 30.26%. VYM’s worst year over the past decade yielded -5.87% and occurred in 2018. In most years the Vanguard High Dividend Yield Index Fund ETF Shares provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 12.68%, 13.47%, and 14.17% respectively.
The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VYM would have resulted in a final balance of $33,914. This is a profit of $23,914 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.20%.
With a $10,000 investment in BIV, the end total would have been $17,492. This equates to a $7,492 profit over 11 years and a compound annual growth rate (CAGR) of 5.31%.
VYM’s CAGR is 6.88 percentage points higher than that of BIV and as a result, would have yielded $16,422 more on a $10,000 investment. Thus, VYM outperformed BIV by 6.88% annually.
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