VYM vs. IVW: What’s The Difference?

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and IVW is a iShares Large Growth fund. So, what’s the difference between VYM and IVW? And which fund is better?

The expense ratio of VYM is 0.12 percentage points lower than IVW’s (0.06% vs. 0.18%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than IVW over the past ten years.

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

Summary

VYM IVW
Name Vanguard High Dividend Yield Index Fund ETF Shares iShares S&P 500 Growth ETF
Category Large Value Large Growth
Issuer Vanguard iShares
AUM 48.5B 35.72B
Avg. Return 12.20% 16.74%
Div. Yield 2.79% 0.61%
Expense Ratio 0.06% 0.18%

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 S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

VYM’s dividend yield is 2.18% higher than that of IVW (2.79% vs. 0.61%). Also, VYM yielded on average 4.54% less per year over the past decade (12.20% vs. 16.74%). The expense ratio of VYM is 0.12 percentage points lower than IVW’s (0.06% vs. 0.18%).

Fund Composition

Industry Exposure

VYM vs. IVW - Industry Exposure

VYM IVW
Technology 9.77% 37.8%
Industrials 10.14% 5.72%
Energy 7.12% 0.06%
Communication Services 5.91% 15.44%
Utilities 7.27% 0.47%
Healthcare 13.61% 11.88%
Consumer Defensive 14.13% 3.84%
Real Estate 0.02% 1.11%
Financial Services 22.05% 6.78%
Consumer Cyclical 5.57% 15.25%
Basic Materials 4.41% 1.65%

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 S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

VYM is 15.27% more exposed to the Financial Services sector than IVW (22.05% vs 6.78%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 10.29% higher and 1.73% higher respectively (14.13% vs. 3.84% and 13.61% vs. 11.88%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 16.45% less of the fund’s holdings compared to IVW (15.89% vs. 32.34%).

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%.

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

Risk Analysis

VYM IVW
Mean Return 1.04 1.44
R-squared 88.88 93.82
Std. Deviation 12.69 13.77
Alpha -0.7 2.19
Beta 0.88 0.98
Sharpe Ratio 0.93 1.21
Treynor Ratio 13.24 17.24

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Beta of 0.88 with a Mean Return of 1.04 and a Alpha of -0.7. Its Standard Deviation is 12.69 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 S&P 500 Growth ETF (IVW) has a Beta of 0.98 with a Alpha of 2.19 and a Sharpe Ratio of 1.21. Its Mean Return is 1.44 while IVW’s R-squared is 93.82. Furthermore, the fund has a Treynor Ratio of 17.24 and a Standard Deviation of 13.77.

VYM’s Mean Return is 0.40 points lower than that of IVW and its R-squared is 4.94 points lower. With a Standard Deviation of 12.69, VYM is slightly less volatile than IVW. The Alpha and Beta of VYM are 2.89 points lower and 0.10 points lower than IVW’s Alpha and Beta.

Performance

Annual Returns

VYM vs. IVW - Annual Returns

Year VYM IVW
2020 1.14% 33.21%
2019 24.2% 30.91%
2018 -5.87% -0.17%
2017 16.42% 27.2%
2016 16.87% 6.74%
2015 0.33% 5.33%
2014 13.47% 14.67%
2013 30.26% 32.48%
2012 12.68% 14.39%
2011 10.5% 4.49%
2010 14.17% 14.84%

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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.

Portfolio Growth

VYM vs. IVW - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
IVW $10,000 $51,915 16.74%

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 IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.

VYM’s CAGR is 4.54 percentage points lower than that of IVW and as a result, would have yielded $18,001 less on a $10,000 investment. Thus, VYM performed worse than IVW by 4.54% annually.


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