VYM vs. SDY: Fund Composition, Risk Analysis & Performance

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the SPDR S&P Dividend ETF (SDY) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and SDY is a SPDR State Street Global Advisors Large Value fund. So, what’s the difference between VYM and SDY? And which fund is better?

The expense ratio of VYM is 0.29 percentage points lower than SDY’s (0.06% vs. 0.35%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than SDY over the past ten years.

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

Summary

VYM SDY
Name Vanguard High Dividend Yield Index Fund ETF Shares SPDR S&P Dividend ETF
Category Large Value Large Value
Issuer Vanguard SPDR State Street Global Advisors
AUM 48.5B 19.67B
Avg. Return 12.20% 12.44%
Div. Yield 2.79% 2.65%
Expense Ratio 0.06% 0.35%

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 Dividend ETF (SDY) is a Large Value fund that is issued by SPDR State Street Global Advisors. It currently has 19.67B total assets under management and has yielded an average annual return of 12.44% over the past 10 years. The fund has a dividend yield of 2.65% with an expense ratio of 0.35%.

VYM’s dividend yield is 0.14% higher than that of SDY (2.79% vs. 2.65%). Also, VYM yielded on average 0.24% less per year over the past decade (12.20% vs. 12.44%). The expense ratio of VYM is 0.29 percentage points lower than SDY’s (0.06% vs. 0.35%).

Fund Composition

Industry Exposure

VYM vs. SDY - Industry Exposure

VYM SDY
Technology 9.77% 2.0%
Industrials 10.14% 15.89%
Energy 7.12% 5.95%
Communication Services 5.91% 4.64%
Utilities 7.27% 12.14%
Healthcare 13.61% 7.35%
Consumer Defensive 14.13% 14.01%
Real Estate 0.02% 6.57%
Financial Services 22.05% 16.32%
Consumer Cyclical 5.57% 8.68%
Basic Materials 4.41% 6.45%

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 Dividend ETF (SDY) has the most exposure to the Financial Services sector at 16.32%. This is followed by Industrials and Consumer Defensive at 15.89% and 14.01% respectively. Communication Services (4.64%), Energy (5.95%), and Basic Materials (6.45%) only make up 17.04% of the fund’s total assets.

SDY’s mid-section with moderate exposure is comprised of Real Estate, Healthcare, Consumer Cyclical, Utilities, and Consumer Defensive stocks at 6.57%, 7.35%, 8.68%, 12.14%, and 14.01%.

VYM is 5.73% more exposed to the Financial Services sector than SDY (22.05% vs 16.32%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 0.12% higher and 6.26% higher respectively (14.13% vs. 14.01% and 13.61% vs. 7.35%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 3.88% less of the fund’s holdings compared to SDY (15.89% vs. 19.77%).

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%.

SDY - Holdings

SDY Holdings Weight
Exxon Mobil Corp 2.81%
AT&T Inc 2.5%
South Jersey Industries Inc 2.22%
Chevron Corp 2.02%
International Business Machines Corp 2.0%
AbbVie Inc 1.93%
National Retail Properties Inc 1.86%
Federal Realty Investment Trust 1.77%
Realty Income Corp 1.7%
Old Republic International Corp 1.65%

SDY’s Top Holdings are Exxon Mobil Corp, AT&T Inc, South Jersey Industries Inc, Chevron Corp, and International Business Machines Corp at 2.81%, 2.5%, 2.22%, 2.02%, and 2.0%.

AbbVie Inc (1.93%), National Retail Properties Inc (1.86%), and Federal Realty Investment Trust (1.77%) have a slightly smaller but still significant weight. Realty Income Corp and Old Republic International Corp are also represented in the SDY’s holdings at 1.7% and 1.65%.

Risk Analysis

VYM SDY
Mean Return 1.04 1.07
R-squared 88.88 83.62
Std. Deviation 12.69 12.9
Alpha -0.7 -0.1
Beta 0.88 0.87
Sharpe Ratio 0.93 0.95
Treynor Ratio 13.24 13.94

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 Beta of 0.88. Its Treynor Ratio is 13.24 while VYM’s Standard Deviation is 12.69. Furthermore, the fund has a Mean Return of 1.04 and a Alpha of -0.7.

The SPDR S&P Dividend ETF (SDY) has a Alpha of -0.1 with a Beta of 0.87 and a Sharpe Ratio of 0.95. Its Treynor Ratio is 13.94 while SDY’s Standard Deviation is 12.9. Furthermore, the fund has a R-squared of 83.62 and a Mean Return of 1.07.

VYM’s Mean Return is 0.03 points lower than that of SDY and its R-squared is 5.26 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than SDY. The Alpha and Beta of VYM are 0.60 points lower and 0.01 points higher than SDY’s Alpha and Beta.

Performance

Annual Returns

VYM vs. SDY - Annual Returns

Year VYM SDY
2020 1.14% 1.78%
2019 24.2% 23.37%
2018 -5.87% -2.73%
2017 16.42% 15.84%
2016 16.87% 20.17%
2015 0.33% -0.7%
2014 13.47% 13.8%
2013 30.26% 30.09%
2012 12.68% 11.51%
2011 10.5% 7.28%
2010 14.17% 16.41%

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 SDY, returning 30.09% on an annual basis. The poorest year for SDY in the last ten years was 2018, with a yield of -2.73%. Most years the SPDR S&P Dividend ETF has given investors modest returns, such as in 2012, 2014, and 2017, when gains were 11.51%, 13.8%, and 15.84% respectively.

Portfolio Growth

VYM vs. SDY - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
SDY $10,000 $34,806 12.44%

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 SDY, the end total would have been $34,806. This equates to a $24,806 profit over 11 years and a compound annual growth rate (CAGR) of 12.44%.

VYM’s CAGR is 0.24 percentage points lower than that of SDY and as a result, would have yielded $892 less on a $10,000 investment. Thus, VYM performed worse than SDY by 0.24% annually.


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