VYM vs. EFV: What’s The Difference?

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

The expense ratio of VYM is 0.33 percentage points lower than EFV’s (0.06% vs. 0.39%). VYM also has a lower exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided higher returns than EFV over the past ten years.

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

Summary

VYM EFV
Name Vanguard High Dividend Yield Index Fund ETF Shares iShares MSCI EAFE Value ETF
Category Large Value Foreign Large Value
Issuer Vanguard iShares
AUM 48.5B 14.37B
Avg. Return 12.20% 3.99%
Div. Yield 2.79% 2.94%
Expense Ratio 0.06% 0.39%

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 iShares MSCI EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.

VYM’s dividend yield is 0.15% lower than that of EFV (2.79% vs. 2.94%). Also, VYM yielded on average 8.20% more per year over the past decade (12.20% vs. 3.99%). The expense ratio of VYM is 0.33 percentage points lower than EFV’s (0.06% vs. 0.39%).

Fund Composition

Industry Exposure

VYM vs. EFV - Industry Exposure

VYM EFV
Technology 9.77% 2.98%
Industrials 10.14% 11.6%
Energy 7.12% 6.6%
Communication Services 5.91% 6.46%
Utilities 7.27% 6.14%
Healthcare 13.61% 9.19%
Consumer Defensive 14.13% 6.82%
Real Estate 0.02% 5.06%
Financial Services 22.05% 26.55%
Consumer Cyclical 5.57% 9.0%
Basic Materials 4.41% 9.59%

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%.

The iShares MSCI EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.

EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.

VYM is 4.50% less exposed to the Financial Services sector than EFV (22.05% vs 26.55%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 7.31% higher and 4.42% higher respectively (14.13% vs. 6.82% and 13.61% vs. 9.19%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 9.16% less of the fund’s holdings compared to EFV (15.89% vs. 25.05%).

Holdings

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%.

EFV - Holdings

EFV Holdings Weight
Novartis AG 2.41%
Toyota Motor Corp 2.21%
Commonwealth Bank of Australia 1.59%
Siemens AG 1.45%
Sanofi SA 1.42%
HSBC Holdings PLC 1.4%
TotalEnergies SE 1.35%
Allianz SE 1.23%
GlaxoSmithKline PLC 1.18%
Rio Tinto PLC 1.1%

EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.

HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.

Risk Analysis

VYM EFV
Mean Return 1.04 0.42
R-squared 88.88 92.15
Std. Deviation 12.69 16.53
Alpha -0.7 -1.77
Beta 0.88 1.05
Sharpe Ratio 0.93 0.26
Treynor Ratio 13.24 2.92

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

The iShares MSCI EAFE Value ETF (EFV) has a Treynor Ratio of 2.92 with a Alpha of -1.77 and a Sharpe Ratio of 0.26. Its Beta is 1.05 while EFV’s R-squared is 92.15. Furthermore, the fund has a Mean Return of 0.42 and a Standard Deviation of 16.53.

VYM’s Mean Return is 0.62 points higher than that of EFV and its R-squared is 3.27 points lower. With a Standard Deviation of 12.69, VYM is slightly less volatile than EFV. The Alpha and Beta of VYM are 1.07 points higher and 0.17 points lower than EFV’s Alpha and Beta.

Performance

Annual Returns

VYM vs. EFV - Annual Returns

Year VYM EFV
2020 1.14% -2.78%
2019 24.2% 15.97%
2018 -5.87% -14.88%
2017 16.42% 21.22%
2016 16.87% 4.87%
2015 0.33% -5.89%
2014 13.47% -5.65%
2013 30.26% 22.61%
2012 12.68% 17.52%
2011 10.5% -12.24%
2010 14.17% 3.18%

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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.

Portfolio Growth

VYM vs. EFV - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
EFV $10,000 $14,134 3.99%

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 EFV, the end total would have been $14,134. This equates to a $4,134 profit over 11 years and a compound annual growth rate (CAGR) of 3.99%.

VYM’s CAGR is 8.20 percentage points higher than that of EFV and as a result, would have yielded $19,780 more on a $10,000 investment. Thus, VYM outperformed EFV by 8.20% annually.


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