VYM vs. IWS: What’s The Difference?

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

The expense ratio of VYM is 0.17 percentage points lower than IWS’s (0.06% vs. 0.23%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than IWS over the past ten years.

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

Summary

VYM IWS
Name Vanguard High Dividend Yield Index Fund ETF Shares iShares Russell Mid-Cap Value ETF
Category Large Value Mid-Cap Value
Issuer Vanguard iShares
AUM 48.5B 14.24B
Avg. Return 12.20% 12.35%
Div. Yield 2.79% 1.34%
Expense Ratio 0.06% 0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

VYM’s dividend yield is 1.45% higher than that of IWS (2.79% vs. 1.34%). Also, VYM yielded on average 0.15% less per year over the past decade (12.20% vs. 12.35%). The expense ratio of VYM is 0.17 percentage points lower than IWS’s (0.06% vs. 0.23%).

Fund Composition

Industry Exposure

VYM vs. IWS - Industry Exposure

VYM IWS
Technology 9.77% 11.39%
Industrials 10.14% 14.6%
Energy 7.12% 4.71%
Communication Services 5.91% 4.08%
Utilities 7.27% 6.97%
Healthcare 13.61% 8.56%
Consumer Defensive 14.13% 4.76%
Real Estate 0.02% 11.71%
Financial Services 22.05% 15.75%
Consumer Cyclical 5.57% 12.07%
Basic Materials 4.41% 5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

VYM is 6.30% more exposed to the Financial Services sector than IWS (22.05% vs 15.75%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 9.37% higher and 5.05% higher respectively (14.13% vs. 4.76% and 13.61% vs. 8.56%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 5.66% less of the fund’s holdings compared to IWS (15.89% vs. 21.55%).

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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

Risk Analysis

VYM IWS
Mean Return 1.04 1.06
R-squared 88.88 87.04
Std. Deviation 12.69 16.03
Alpha -0.7 -4.11
Beta 0.88 1.1
Sharpe Ratio 0.93 0.75
Treynor Ratio 13.24 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a Treynor Ratio of 10.3 with a Standard Deviation of 16.03 and a R-squared of 87.04. Its Alpha is -4.11 while IWS’s Mean Return is 1.06. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Beta of 1.1.

VYM’s Mean Return is 0.02 points lower than that of IWS and its R-squared is 1.84 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than IWS. The Alpha and Beta of VYM are 3.41 points higher and 0.22 points lower than IWS’s Alpha and Beta.

Performance

Annual Returns

VYM vs. IWS - Annual Returns

Year VYM IWS
2020 1.14% 4.76%
2019 24.2% 26.78%
2018 -5.87% -12.36%
2017 16.42% 13.1%
2016 16.87% 19.69%
2015 0.33% -4.93%
2014 13.47% 14.49%
2013 30.26% 33.11%
2012 12.68% 18.27%
2011 10.5% -1.55%
2010 14.17% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

VYM vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
IWS $10,000 $33,083 12.35%

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 IWS, the end total would have been $33,083. This equates to a $23,083 profit over 11 years and a compound annual growth rate (CAGR) of 12.35%.

VYM’s CAGR is 0.15 percentage points lower than that of IWS and as a result, would have yielded $831 more on a $10,000 investment. Thus, VYM performed worse than IWS by 0.15% 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) 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!

2) 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!).

3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).

To see all of my most up-to-date recommendations, check out the Recommended Tools section.

Leave a Reply