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.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||iShares MSCI EAFE Value ETF|
|Category||Large Value||Foreign Large Value|
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%).
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
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%).
|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%.
|Toyota Motor Corp||2.21%|
|Commonwealth Bank of Australia||1.59%|
|HSBC Holdings PLC||1.4%|
|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%.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
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.
|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 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.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.