Skip to content

VYM vs. EMB: What’s The Difference?

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between VYM and EMB? And which fund is better?

The expense ratio of VYM is 0.33 percentage points lower than EMB’s (0.06% vs. 0.39%). VYM also has a high exposure to the financial services sector while EMB is mostly comprised of BBB bonds. Overall, VYM has provided higher returns than EMB over the past ten years.

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

TIP: Keep track of all your investments with Personal Capital. I use this amazing tool to aggregate all investments in one place and make sure I'm on track to financial freedom. Oh, and did I mention it's free? Try it out here (link to Personal Capital).

Summary

VYMEMB
NameVanguard High Dividend Yield Index Fund ETF SharesiShares J.P. Morgan USD Emerging Markets Bond ETF
CategoryLarge ValueEmerging Markets Bond
IssuerVanguardiShares
AUM48.5B19.76B
Avg. Return12.20%6.43%
Div. Yield2.79%3.85%
Expense Ratio0.06%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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.

VYM’s dividend yield is 1.06% lower than that of EMB (2.79% vs. 3.85%). Also, VYM yielded on average 5.76% more per year over the past decade (12.20% vs. 6.43%). The expense ratio of VYM is 0.33 percentage points lower than EMB’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).

Fund Composition

Holdings

VYM - Holdings

VYM HoldingsWeight
JPMorgan Chase & Co3.53%
Johnson & Johnson3.28%
The Home Depot Inc2.59%
Procter & Gamble Co2.48%
Bank of America Corp2.35%
Exxon Mobil Corp2.02%
Comcast Corp Class A1.96%
Verizon Communications Inc1.75%
Intel Corp1.71%
Cisco Systems Inc1.69%

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%.

EMB - Holdings

EMB Bond SectorsWeight
BBB33.79%
B21.97%
BB16.92%
A13.67%
AA7.97%
Below B4.49%
Others1.11%
AAA0.09%
US Government0.0%

EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.

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).

Risk Analysis

VYMEMB
Mean Return1.040.44
R-squared88.8823.34
Std. Deviation12.698.44
Alpha-0.70.89
Beta0.881.36
Sharpe Ratio0.930.55
Treynor Ratio13.243.24

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

The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Sharpe Ratio of 0.55 with a Treynor Ratio of 3.24 and a R-squared of 23.34. Its Beta is 1.36 while EMB’s Mean Return is 0.44. Furthermore, the fund has a Standard Deviation of 8.44 and a Alpha of 0.89.

VYM’s Mean Return is 0.60 points higher than that of EMB and its R-squared is 65.54 points higher. With a Standard Deviation of 12.69, VYM is slightly more volatile than EMB. The Alpha and Beta of VYM are 1.59 points lower and 0.48 points lower than EMB’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!

Performance

Annual Returns

VYM vs. EMB - Annual Returns

YearVYMEMB
20201.14%5.48%
201924.2%15.57%
2018-5.87%-5.67%
201716.42%9.98%
201616.87%9.41%
20150.33%0.43%
201413.47%6.69%
201330.26%-7.42%
201212.68%17.64%
201110.5%7.2%
201014.17%11.47%

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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.

Portfolio Growth

VYM vs. EMB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VYM$10,000$33,91412.20%
EMB$10,000$19,2956.43%

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 EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.

VYM’s CAGR is 5.76 percentage points higher than that of EMB and as a result, would have yielded $14,619 more on a $10,000 investment. Thus, VYM outperformed EMB by 5.76% annually.


Current recommendations:

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.

Leave a Reply

Your email address will not be published.