The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Invesco S&P 500 Equal Weight ETF (RSP) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and RSP is a Invesco Large Blend fund. So, what’s the difference between VYM and RSP? And which fund is better?
The expense ratio of VYM is 0.14 percentage points lower than RSP’s (0.06% vs. 0.2%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than RSP over the past ten years.
In this article, we’ll compare VYM vs. RSP. We’ll look at risk metrics and performance, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss VYM’s and RSP’s fund composition, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||Invesco S&P 500 Equal Weight ETF|
|Category||Large Value||Large Blend|
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 Invesco S&P 500 Equal Weight ETF (RSP) is a Large Blend fund that is issued by Invesco. It currently has 28.62B total assets under management and has yielded an average annual return of 13.79% over the past 10 years. The fund has a dividend yield of 1.31% with an expense ratio of 0.2%.
VYM’s dividend yield is 1.48% higher than that of RSP (2.79% vs. 1.31%). Also, VYM yielded on average 1.59% less per year over the past decade (12.20% vs. 13.79%). The expense ratio of VYM is 0.14 percentage points lower than RSP’s (0.06% vs. 0.2%).
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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 Invesco S&P 500 Equal Weight ETF (RSP) has the most exposure to the Technology sector at 14.73%. This is followed by Industrials and Healthcare at 14.62% and 13.69% respectively. Basic Materials (4.04%), Communication Services (4.31%), and Utilities (5.58%) only make up 13.93% of the fund’s total assets.
RSP’s mid-section with moderate exposure is comprised of Real Estate, Consumer Defensive, Consumer Cyclical, Financial Services, and Healthcare stocks at 5.84%, 6.86%, 13.01%, 13.43%, and 13.69%.
VYM is 8.62% more exposed to the Financial Services sector than RSP (22.05% vs 13.43%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 7.27% higher and 0.08% lower respectively (14.13% vs. 6.86% and 13.61% vs. 13.69%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 5.47% less of the fund’s holdings compared to RSP (15.89% vs. 21.36%).
|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%.
|Chipotle Mexican Grill Inc||0.27%|
|Nike Inc Class B||0.25%|
|Monolithic Power Systems Inc||0.25%|
|Enphase Energy Inc||0.25%|
|Advanced Micro Devices Inc||0.25%|
|IDEXX Laboratories Inc||0.24%|
RSP’s Top Holdings are Chipotle Mexican Grill Inc, Nike Inc Class B, MSCI Inc, Monolithic Power Systems Inc, and Enphase Energy Inc at 0.27%, 0.25%, 0.25%, 0.25%, and 0.25%.
Advanced Micro Devices Inc (0.25%), ResMed Inc (0.24%), and PerkinElmer Inc (0.24%) have a slightly smaller but still significant weight. IDEXX Laboratories Inc and Danaher Corp are also represented in the RSP’s holdings at 0.24% and 0.24%.
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The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Sharpe Ratio of 0.93 with a R-squared of 88.88 and a Beta of 0.88. Its Alpha is -0.7 while VYM’s Standard Deviation is 12.69. Furthermore, the fund has a Treynor Ratio of 13.24 and a Mean Return of 1.04.
The Invesco S&P 500 Equal Weight ETF (RSP) has a Mean Return of 1.19 with a Alpha of -2.45 and a Sharpe Ratio of 0.89. Its Treynor Ratio is 12.12 while RSP’s R-squared is 94.47. Furthermore, the fund has a Beta of 1.1 and a Standard Deviation of 15.36.
VYM’s Mean Return is 0.15 points lower than that of RSP and its R-squared is 5.59 points lower. With a Standard Deviation of 12.69, VYM is slightly less volatile than RSP. The Alpha and Beta of VYM are 1.75 points higher and 0.22 points lower than RSP’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 RSP, returning 35.6% on an annual basis. The poorest year for RSP in the last ten years was 2018, with a yield of -7.77%. Most years the Invesco S&P 500 Equal Weight ETF has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 14.02%, 14.34%, and 17.04% 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 RSP, the end total would have been $38,664. This equates to a $28,664 profit over 11 years and a compound annual growth rate (CAGR) of 13.79%.
VYM’s CAGR is 1.59 percentage points lower than that of RSP and as a result, would have yielded $4,750 less on a $10,000 investment. Thus, VYM performed worse than RSP by 1.59% annually.
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