The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and VBR is a Vanguard Small Value fund. So, what’s the difference between VYM and VBR? And which fund is better?
The expense ratio of VYM is 0.01 percentage points lower than VBR’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 VBR over the past ten years.
In this article, we’ll compare VYM vs. VBR. We’ll look at portfolio growth and performance, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss VYM’s and VBR’s holdings, industry exposure, and fund composition and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||Vanguard Small-Cap Value Index Fund ETF Shares|
|Category||Large Value||Small Value|
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 Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.
VYM’s dividend yield is 1.19% higher than that of VBR (2.79% vs. 1.6%). Also, VYM yielded on average 0.08% less per year over the past decade (12.20% vs. 12.28%). The expense ratio of VYM is 0.01 percentage points lower than VBR’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 Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.
VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.
VYM is 2.01% more exposed to the Financial Services sector than VBR (22.05% vs 20.04%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 9.77% higher and 6.45% higher respectively (14.13% vs. 4.36% and 13.61% vs. 7.16%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 6.01% less of the fund’s holdings compared to VBR (15.89% vs. 21.90%).
|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%.
|Diamondback Energy Inc||0.55%|
|VICI Properties Inc Ordinary Shares||0.54%|
|Nuance Communications Inc||0.5%|
|Molina Healthcare Inc||0.48%|
|Howmet Aerospace Inc||0.44%|
|Apollo Global Management Inc Class A||0.42%|
|Brown & Brown Inc||0.41%|
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
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 Treynor Ratio of 13.24. Its Beta is 0.88 while VYM’s Standard Deviation is 12.69. Furthermore, the fund has a Alpha of -0.7 and a Mean Return of 1.04.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Sharpe Ratio of 0.67 with a Beta of 1.23 and a Standard Deviation of 18.37. Its R-squared is 82.2 while VBR’s Mean Return is 1.08. Furthermore, the fund has a Alpha of -5.09 and a Treynor Ratio of 9.15.
VYM’s Mean Return is 0.04 points lower than that of VBR and its R-squared is 6.68 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than VBR. The Alpha and Beta of VYM are 4.39 points higher and 0.35 points lower than VBR’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 VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% 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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.
VYM’s CAGR is 0.08 percentage points lower than that of VBR and as a result, would have yielded $1,303 more on a $10,000 investment. Thus, VYM performed worse than VBR by 0.08% annually.
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