The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares National Muni Bond ETF (MUB) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and MUB is a iShares Muni National Interm fund. So, what’s the difference between VYM and MUB? And which fund is better?
The expense ratio of VYM is 0.01 percentage points lower than MUB’s (0.06% vs. 0.07%). VYM also has a high exposure to the financial services sector while MUB is mostly comprised of AA bonds. Overall, VYM has provided higher returns than MUB over the past ten years.
In this article, we’ll compare VYM vs. MUB. We’ll look at risk metrics and fund composition, as well as at their performance and industry exposure. Moreover, I’ll also discuss VYM’s and MUB’s annual returns, portfolio growth, and holdings and examine how these affect their overall returns.
Summary
| VYM | MUB | |
| Name | Vanguard High Dividend Yield Index Fund ETF Shares | iShares National Muni Bond ETF |
| Category | Large Value | Muni National Interm |
| Issuer | Vanguard | iShares |
| AUM | 48.5B | 22.71B |
| Avg. Return | 12.20% | 4.04% |
| Div. Yield | 2.79% | 1.96% |
| Expense Ratio | 0.06% | 0.07% |
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 National Muni Bond ETF (MUB) is a Muni National Interm fund that is issued by iShares. It currently has 22.71B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.96% with an expense ratio of 0.07%.
VYM’s dividend yield is 0.83% higher than that of MUB (2.79% vs. 1.96%). Also, VYM yielded on average 8.16% more per year over the past decade (12.20% vs. 4.04%). The expense ratio of VYM is 0.01 percentage points lower than MUB’s (0.06% vs. 0.07%).
Fund Composition
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%.
| MUB Bond Sectors | Weight |
| AA | 60.38% |
| AAA | 18.39% |
| A | 15.04% |
| BBB | 6.0% |
| Others | 0.17% |
| BB | 0.02% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
MUB’s Top Bond Sectors are ratings of AA, AAA, A, BBB, and Others at 60.38%, 18.39%, 15.04%, 6.0%, and 0.17%. The fund is less weighted towards BB (0.02%), Below B (0.0%), and B (0.0%) rated bonds.
Risk Analysis
| VYM | MUB | |
| Mean Return | 1.04 | 0.32 |
| R-squared | 88.88 | 99 |
| Std. Deviation | 12.69 | 3.68 |
| Alpha | -0.7 | -0.46 |
| Beta | 0.88 | 1.01 |
| Sharpe Ratio | 0.93 | 0.88 |
| Treynor Ratio | 13.24 | 3.2 |
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Beta of 0.88 with a R-squared of 88.88 and a Alpha of -0.7. Its Sharpe Ratio is 0.93 while VYM’s Treynor Ratio is 13.24. Furthermore, the fund has a Mean Return of 1.04 and a Standard Deviation of 12.69.
The iShares National Muni Bond ETF (MUB) has a Mean Return of 0.32 with a Alpha of -0.46 and a R-squared of 99. Its Treynor Ratio is 3.2 while MUB’s Beta is 1.01. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Standard Deviation of 3.68.
VYM’s Mean Return is 0.72 points higher than that of MUB and its R-squared is 10.12 points lower. With a Standard Deviation of 12.69, VYM is slightly more volatile than MUB. The Alpha and Beta of VYM are 0.24 points lower and 0.13 points lower than MUB’s Alpha and Beta.
Performance
Annual Returns
| Year | VYM | MUB |
| 2020 | 1.14% | 4.87% |
| 2019 | 24.2% | 7.28% |
| 2018 | -5.87% | 0.86% |
| 2017 | 16.42% | 4.61% |
| 2016 | 16.87% | 0.06% |
| 2015 | 0.33% | 2.99% |
| 2014 | 13.47% | 8.61% |
| 2013 | 30.26% | -3.26% |
| 2012 | 12.68% | 6.14% |
| 2011 | 10.5% | 10.85% |
| 2010 | 14.17% | 1.4% |
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 2011 was the strongest year for MUB, returning 10.85% on an annual basis. The poorest year for MUB in the last ten years was 2013, with a yield of -3.26%. Most years the iShares National Muni Bond ETF has given investors modest returns, such as in 2015, 2017, and 2020, when gains were 2.99%, 4.61%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VYM | $10,000 | $33,914 | 12.20% |
| MUB | $10,000 | $15,333 | 4.04% |
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 MUB, the end total would have been $15,333. This equates to a $5,333 profit over 11 years and a compound annual growth rate (CAGR) of 4.04%.
VYM’s CAGR is 8.16 percentage points higher than that of MUB and as a result, would have yielded $18,581 more on a $10,000 investment. Thus, VYM outperformed MUB by 8.16% annually.
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