The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and VBK is a Vanguard Small Growth fund. So, what’s the difference between VYM and VBK? And which fund is better?
The expense ratio of VYM is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than VBK over the past ten years.
In this article, we’ll compare VYM vs. VBK. We’ll look at portfolio growth and fund composition, as well as at their industry exposure and performance. Moreover, I’ll also discuss VYM’s and VBK’s risk metrics, annual returns, and holdings and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||Vanguard Small-Cap Growth Index Fund ETF Shares|
|Category||Large Value||Small Growth|
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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.
VYM’s dividend yield is 2.34% higher than that of VBK (2.79% vs. 0.45%). Also, VYM yielded on average 4.33% less per year over the past decade (12.20% vs. 16.53%). The expense ratio of VYM is 0.01 percentage points lower than VBK’s (0.06% vs. 0.07%).
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 Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.
VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.
VYM is 18.00% more exposed to the Financial Services sector than VBK (22.05% vs 4.05%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 10.30% higher and 9.63% lower respectively (14.13% vs. 3.83% and 13.61% vs. 23.24%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 1.97% less of the fund’s holdings compared to VBK (15.89% vs. 17.86%).
|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%.
|Charles River Laboratories International Inc||0.78%|
|Fair Isaac Corp||0.57%|
|Bill.com Holdings Inc Ordinary Shares||0.56%|
VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.
Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Alpha of -0.7 with a Standard Deviation of 12.69 and a Mean Return of 1.04. Its R-squared is 88.88 while VYM’s Treynor Ratio is 13.24. Furthermore, the fund has a Sharpe Ratio of 0.93 and a Beta of 0.88.
The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Beta of 1.18 with a Standard Deviation of 17.95 and a R-squared of 80.56. Its Mean Return is 1.22 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a Alpha of -2.81 and a Sharpe Ratio of 0.78.
VYM’s Mean Return is 0.18 points lower than that of VBK and its R-squared is 8.32 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than VBK. The Alpha and Beta of VYM are 2.11 points higher and 0.30 points lower than VBK’s Alpha and Beta.
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 VBK, returning 38.18% on an annual basis. The poorest year for VBK in the last ten years was 2018, with a yield of -5.68%. Most years the Vanguard Small-Cap Growth Index Fund ETF Shares has given investors modest returns, such as in 2016, 2012, and 2017, when gains were 10.74%, 17.67%, and 21.9% 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 VBK, the end total would have been $48,639. This equates to a $38,639 profit over 11 years and a compound annual growth rate (CAGR) of 16.53%.
VYM’s CAGR is 4.33 percentage points lower than that of VBK and as a result, would have yielded $14,725 less on a $10,000 investment. Thus, VYM performed worse than VBK by 4.33% annually.
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