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VYM vs. MBB: What’s The Difference?

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

VYM and MBB have the same expense ratio: 0.06%. VYM also has a high exposure to the financial services sector while MBB is mostly comprised of AAA bonds. Overall, VYM has provided higher returns than MBB over the past ten years.

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

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NameVanguard High Dividend Yield Index Fund ETF SharesiShares MBS ETF
CategoryLarge ValueIntermediate Government
Avg. Return12.20%3.08%
Div. Yield2.79%1.88%
Expense Ratio0.06%0.06%

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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.

VYM’s dividend yield is 0.91% higher than that of MBB (2.79% vs. 1.88%). Also, VYM yielded on average 9.12% more per year over the past decade (12.20% vs. 3.08%). VYM and MBB have the same expense ratio: 0.06%.

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Fund Composition


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%.

MBB - Holdings

MBB Bond SectorsWeight
Below B0.0%
US Government0.0%

MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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Risk Analysis

Mean Return1.040.2
Std. Deviation12.692.12
Sharpe Ratio0.930.87
Treynor Ratio13.243.02

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

The iShares MBS ETF (MBB) has a Treynor Ratio of 3.02 with a R-squared of 74.38 and a Standard Deviation of 2.12. Its Sharpe Ratio is 0.87 while MBB’s Mean Return is 0.2. Furthermore, the fund has a Beta of 0.6 and a Alpha of 0.14.

VYM’s Mean Return is 0.84 points higher than that of MBB and its R-squared is 14.50 points higher. With a Standard Deviation of 12.69, VYM is slightly more volatile than MBB. The Alpha and Beta of VYM are 0.84 points lower and 0.28 points higher than MBB’s Alpha and Beta.

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Annual Returns

VYM vs. MBB - Annual Returns


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 2019 was the strongest year for MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% respectively.

Portfolio Growth

VYM vs. MBB - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR

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 MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.

VYM’s CAGR is 9.12 percentage points higher than that of MBB and as a result, would have yielded $20,008 more on a $10,000 investment. Thus, VYM outperformed MBB by 9.12% annually.

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