VYM vs. MTUM: What’s The Difference?

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares MSCI USA Momentum Factor ETF (MTUM) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and MTUM is a iShares Large Growth fund. So, what’s the difference between VYM and MTUM? And which fund is better?

The expense ratio of VYM is 0.09 percentage points lower than MTUM’s (0.06% vs. 0.15%). VYM also has a lower exposure to the financial services sector and a higher standard deviation. Overall, VYM has provided lower returns than MTUM over the past ten years.

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

Summary

VYM MTUM
Name Vanguard High Dividend Yield Index Fund ETF Shares iShares MSCI USA Momentum Factor ETF
Category Large Value Large Growth
Issuer Vanguard iShares
AUM 48.5B 14.53B
Avg. Return 12.20% 17.37%
Div. Yield 2.79% 0.44%
Expense Ratio 0.06% 0.15%

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 MSCI USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

VYM’s dividend yield is 2.35% higher than that of MTUM (2.79% vs. 0.44%). Also, VYM yielded on average 5.17% less per year over the past decade (12.20% vs. 17.37%). The expense ratio of VYM is 0.09 percentage points lower than MTUM’s (0.06% vs. 0.15%).

Fund Composition

Industry Exposure

VYM vs. MTUM - Industry Exposure

VYM MTUM
Technology 9.77% 15.24%
Industrials 10.14% 12.47%
Energy 7.12% 1.77%
Communication Services 5.91% 13.18%
Utilities 7.27% 0.19%
Healthcare 13.61% 6.41%
Consumer Defensive 14.13% 2.88%
Real Estate 0.02% 0.43%
Financial Services 22.05% 34.32%
Consumer Cyclical 5.57% 9.96%
Basic Materials 4.41% 3.15%

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 MSCI USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

VYM is 12.27% less exposed to the Financial Services sector than MTUM (22.05% vs 34.32%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 11.25% higher and 7.20% higher respectively (14.13% vs. 2.88% and 13.61% vs. 6.41%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 10.40% less of the fund’s holdings compared to MTUM (15.89% vs. 26.29%).

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%.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

Risk Analysis

VYM MTUM
Mean Return 1.04 0
R-squared 88.88 0
Std. Deviation 12.69 0
Alpha -0.7 0
Beta 0.88 0
Sharpe Ratio 0.93 0
Treynor Ratio 13.24 0

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

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Treynor Ratio of 0 with a Mean Return of 0 and a Sharpe Ratio of 0. Its Alpha is 0 while MTUM’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.

VYM’s Mean Return is 1.04 points higher than that of MTUM and its R-squared is 88.88 points higher. With a Standard Deviation of 12.69, VYM is slightly more volatile than MTUM. The Alpha and Beta of VYM are 0.70 points lower and 0.88 points higher than MTUM’s Alpha and Beta.

Performance

Annual Returns

VYM vs. MTUM - Annual Returns

Year VYM MTUM
2020 1.14% 29.69%
2019 24.2% 27.57%
2018 -5.87% -1.77%
2017 16.42% 37.6%
2016 16.87% 4.89%
2015 0.33% 9.12%
2014 13.47% 14.48%
2013 30.26% 0.0%
2012 12.68% 0.0%
2011 10.5% 0.0%
2010 14.17% 0.0%

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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

VYM vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $18,315 12.20%
MTUM $10,000 $29,301 17.37%

A $10,000 investment in VYM would have resulted in a final balance of $18,315. This is a profit of $8,315 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.20%.

With a $10,000 investment in MTUM, the end total would have been $29,301. This equates to a $19,301 profit over 7 years and a compound annual growth rate (CAGR) of 17.37%.

VYM’s CAGR is 5.17 percentage points lower than that of MTUM and as a result, would have yielded $10,986 less on a $10,000 investment. Thus, VYM performed worse than MTUM by 5.17% 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