The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the SPDR S&P MIDCAP 400 ETF Trust (MDY) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund. So, what’s the difference between VYM and MDY? And which fund is better?
The expense ratio of VYM is 0.17 percentage points lower than MDY’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 MDY over the past ten years.
In this article, we’ll compare VYM vs. MDY. We’ll look at risk metrics and annual returns, as well as at their performance and holdings. Moreover, I’ll also discuss VYM’s and MDY’s portfolio growth, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||SPDR S&P MIDCAP 400 ETF Trust|
|Category||Large Value||Mid-Cap Blend|
|Issuer||Vanguard||SPDR State Street Global Advisors|
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 SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.
VYM’s dividend yield is 1.85% higher than that of MDY (2.79% vs. 0.94%). Also, VYM yielded on average 1.09% less per year over the past decade (12.20% vs. 13.29%). The expense ratio of VYM is 0.17 percentage points lower than MDY’s (0.06% vs. 0.23%).
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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 SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.
MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.
VYM is 6.85% more exposed to the Financial Services sector than MDY (22.05% vs 15.2%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 9.93% higher and 2.44% higher respectively (14.13% vs. 4.2% and 13.61% vs. 11.17%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 5.90% less of the fund’s holdings compared to MDY (15.89% vs. 21.79%).
|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%.
|Molina Healthcare Inc||0.63%|
|Fair Isaac Corp||0.62%|
|XPO Logistics Inc||0.61%|
|SolarEdge Technologies Inc||0.61%|
|Camden Property Trust||0.55%|
|FactSet Research Systems Inc||0.54%|
MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.
SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.
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The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Mean Return of 1.04 with a R-squared of 88.88 and a Treynor Ratio of 13.24. Its Alpha is -0.7 while VYM’s Sharpe Ratio is 0.93. Furthermore, the fund has a Beta of 0.88 and a Standard Deviation of 12.69.
The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Treynor Ratio of 9.97 with a Beta of 1.15 and a Standard Deviation of 16.83. Its Mean Return is 1.08 while MDY’s Sharpe Ratio is 0.73. Furthermore, the fund has a Alpha of -4.1 and a R-squared of 86.66.
VYM’s Mean Return is 0.04 points lower than that of MDY and its R-squared is 2.22 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than MDY. The Alpha and Beta of VYM are 3.40 points higher and 0.27 points lower than MDY’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 2013 was the strongest year for MDY, returning 33.08% on an annual basis. The poorest year for MDY in the last ten years was 2018, with a yield of -11.28%. Most years the SPDR S&P MIDCAP 400 ETF Trust has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 13.51%, 15.89%, and 17.58% 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 MDY, the end total would have been $36,524. This equates to a $26,524 profit over 11 years and a compound annual growth rate (CAGR) of 13.29%.
VYM’s CAGR is 1.09 percentage points lower than that of MDY and as a result, would have yielded $2,610 less on a $10,000 investment. Thus, VYM performed worse than MDY by 1.09% annually.
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