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VYM vs. IWR: What’s The Difference?

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares Russell Mid-Cap ETF (IWR) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and IWR is a iShares Mid-Cap Blend fund. So, what’s the difference between VYM and IWR? And which fund is better?

The expense ratio of VYM is 0.13 percentage points lower than IWR’s (0.06% vs. 0.19%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than IWR over the past ten years.

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

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Summary

VYMIWR
NameVanguard High Dividend Yield Index Fund ETF SharesiShares Russell Mid-Cap ETF
CategoryLarge ValueMid-Cap Blend
IssuerVanguardiShares
AUM48.5B29.84B
Avg. Return12.20%14.15%
Div. Yield2.79%0.99%
Expense Ratio0.06%0.19%

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 Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% with an expense ratio of 0.19%.

VYM’s dividend yield is 1.80% higher than that of IWR (2.79% vs. 0.99%). Also, VYM yielded on average 1.95% less per year over the past decade (12.20% vs. 14.15%). The expense ratio of VYM is 0.13 percentage points lower than IWR’s (0.06% vs. 0.19%).

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Fund Composition

Industry Exposure

VYM vs. IWR - Industry Exposure

VYMIWR
Technology9.77%19.67%
Industrials10.14%14.54%
Energy7.12%3.48%
Communication Services5.91%4.64%
Utilities7.27%4.46%
Healthcare13.61%11.76%
Consumer Defensive14.13%3.82%
Real Estate0.02%8.31%
Financial Services22.05%11.64%
Consumer Cyclical5.57%13.59%
Basic Materials4.41%4.1%

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 Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, and 13.59%.

VYM is 10.41% more exposed to the Financial Services sector than IWR (22.05% vs 11.64%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 10.31% higher and 1.85% higher respectively (14.13% vs. 3.82% and 13.61% vs. 11.76%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 6.44% less of the fund’s holdings compared to IWR (15.89% vs. 22.33%).

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%.

IWR - Holdings

IWR HoldingsWeight
IDEXX Laboratories Inc0.51%
DocuSign Inc0.51%
Twitter Inc0.48%
Chipotle Mexican Grill Inc0.47%
Roku Inc Class A0.44%
Marvell Technology Inc0.44%
DexCom Inc0.44%
Trane Technologies PLC0.43%
MSCI Inc0.43%
Carrier Global Corp Ordinary Shares0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

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Risk Analysis

VYMIWR
Mean Return1.041.17
R-squared88.8891.52
Std. Deviation12.6915.66
Alpha-0.7-2.8
Beta0.881.11
Sharpe Ratio0.930.86
Treynor Ratio13.2411.72

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

The iShares Russell Mid-Cap ETF (IWR) has a Standard Deviation of 15.66 with a Alpha of -2.8 and a Treynor Ratio of 11.72. Its R-squared is 91.52 while IWR’s Sharpe Ratio is 0.86. Furthermore, the fund has a Beta of 1.11 and a Mean Return of 1.17.

VYM’s Mean Return is 0.13 points lower than that of IWR and its R-squared is 2.64 points lower. With a Standard Deviation of 12.69, VYM is slightly less volatile than IWR. The Alpha and Beta of VYM are 2.10 points higher and 0.23 points lower than IWR’s Alpha and Beta.

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Performance

Annual Returns

VYM vs. IWR - Annual Returns

YearVYMIWR
20201.14%16.91%
201924.2%30.31%
2018-5.87%-9.13%
201716.42%18.32%
201616.87%13.58%
20150.33%-2.57%
201413.47%13.03%
201330.26%34.5%
201212.68%17.13%
201110.5%-1.67%
201014.17%25.25%

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 IWR, returning 34.5% on an annual basis. The poorest year for IWR in the last ten years was 2018, with a yield of -9.13%. Most years the iShares Russell Mid-Cap ETF has given investors modest returns, such as in 2016, 2020, and 2012, when gains were 13.58%, 16.91%, and 17.13% respectively.

Portfolio Growth

VYM vs. IWR - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VYM$10,000$33,91412.20%
IWR$10,000$39,75114.15%

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 IWR, the end total would have been $39,751. This equates to a $29,751 profit over 11 years and a compound annual growth rate (CAGR) of 14.15%.

VYM’s CAGR is 1.95 percentage points lower than that of IWR and as a result, would have yielded $5,837 less on a $10,000 investment. Thus, VYM performed worse than IWR by 1.95% annually.


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