The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares Gold Trust (IAU) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and IAU is a iShares N/A fund. So, what’s the difference between VYM and IAU? And which fund is better?
The expense ratio of VYM is 0.19 percentage points lower than IAU’s (0.06% vs. 0.25%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided higher returns than IAU over the past ten years.
In this article, we’ll compare VYM vs. IAU. We’ll look at performance and holdings, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VYM’s and IAU’s industry exposure, fund composition, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||iShares Gold Trust|
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 Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.
VYM’s dividend yield is 2.79% higher than that of IAU (2.79% vs. 0.0%). Also, VYM yielded on average 6.17% more per year over the past decade (12.20% vs. 6.03%). The expense ratio of VYM is 0.19 percentage points lower than IAU’s (0.06% vs. 0.25%).
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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 Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.
IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.
VYM is 22.05% more exposed to the Financial Services sector than IAU (22.05% vs 0.0%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 14.13% higher and 13.61% higher respectively (14.13% vs. 0.0% and 13.61% vs. 0.0%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 15.89% more of the fund’s holdings compared to IAU (15.89% vs. 0.00%).
|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%.
IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.
N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.
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The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Standard Deviation of 12.69 with a Alpha of -0.7 and a Beta of 0.88. Its Mean Return is 1.04 while VYM’s Sharpe Ratio is 0.93. Furthermore, the fund has a Treynor Ratio of 13.24 and a R-squared of 88.88.
The iShares Gold Trust (IAU) has a Treynor Ratio of 1.5 with a Beta of 0.48 and a Sharpe Ratio of 0.13. Its Alpha is 4.16 while IAU’s Mean Return is 0.23. Furthermore, the fund has a Standard Deviation of 16.97 and a R-squared of 16.03.
VYM’s Mean Return is 0.81 points higher than that of IAU and its R-squared is 72.85 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than IAU. The Alpha and Beta of VYM are 4.86 points lower and 0.40 points higher than IAU’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 2010 was the strongest year for IAU, returning 27.93% on an annual basis. The poorest year for IAU in the last ten years was 2013, with a yield of -27.96%. Most years the iShares Gold Trust has given investors modest returns, such as in 2012, 2011, and 2016, when gains were 8.37%, 8.66%, and 8.85% 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 IAU, the end total would have been $16,786. This equates to a $6,786 profit over 11 years and a compound annual growth rate (CAGR) of 6.03%.
VYM’s CAGR is 6.17 percentage points higher than that of IAU and as a result, would have yielded $17,128 more on a $10,000 investment. Thus, VYM outperformed IAU by 6.17% annually.
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