VYM vs. VGK: What’s The Difference?

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between VYM and VGK? And which fund is better?

The expense ratio of VYM is 0.02 percentage points lower than VGK’s (0.06% vs. 0.08%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided higher returns than VGK over the past ten years.

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

Summary

VYM VGK
Name Vanguard High Dividend Yield Index Fund ETF Shares Vanguard FTSE Europe Index Fund ETF Shares
Category Large Value Europe Stock
Issuer Vanguard Vanguard
AUM 48.5B 25.7B
Avg. Return 12.20% 6.68%
Div. Yield 2.79% 2.52%
Expense Ratio 0.06% 0.08%

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 FTSE Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

VYM’s dividend yield is 0.27% higher than that of VGK (2.79% vs. 2.52%). Also, VYM yielded on average 5.52% more per year over the past decade (12.20% vs. 6.68%). The expense ratio of VYM is 0.02 percentage points lower than VGK’s (0.06% vs. 0.08%).

Fund Composition

Industry Exposure

VYM vs. VGK - Industry Exposure

VYM VGK
Technology 9.77% 8.3%
Industrials 10.14% 15.58%
Energy 7.12% 4.3%
Communication Services 5.91% 5.09%
Utilities 7.27% 3.89%
Healthcare 13.61% 13.76%
Consumer Defensive 14.13% 11.39%
Real Estate 0.02% 2.57%
Financial Services 22.05% 15.85%
Consumer Cyclical 5.57% 11.6%
Basic Materials 4.41% 7.67%

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 FTSE Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

VYM is 6.20% more exposed to the Financial Services sector than VGK (22.05% vs 15.85%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 2.74% higher and 0.15% lower respectively (14.13% vs. 11.39% and 13.61% vs. 13.76%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 8.47% less of the fund’s holdings compared to VGK (15.89% vs. 24.36%).

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%.

VGK - Holdings

VGK Holdings Weight
Nestle SA 2.82%
ASML Holding NV 2.2%
Roche Holding AG 2.13%
LVMH Moet Hennessy Louis Vuitton SE 1.58%
Novartis AG 1.55%
AstraZeneca PLC 1.27%
SAP SE 1.25%
Unilever PLC 1.23%
Novo Nordisk A/S B 1.09%
Siemens AG 0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

Risk Analysis

VYM VGK
Mean Return 1.04 0.61
R-squared 88.88 92.76
Std. Deviation 12.69 16.65
Alpha -0.7 0.45
Beta 0.88 1.06
Sharpe Ratio 0.93 0.4
Treynor Ratio 13.24 5.12

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Treynor Ratio of 13.24 with a Mean Return of 1.04 and a Beta of 0.88. Its Standard Deviation is 12.69 while VYM’s R-squared is 88.88. Furthermore, the fund has a Sharpe Ratio of 0.93 and a Alpha of -0.7.

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a Standard Deviation of 16.65 with a Treynor Ratio of 5.12 and a Mean Return of 0.61. Its Alpha is 0.45 while VGK’s Beta is 1.06. Furthermore, the fund has a Sharpe Ratio of 0.4 and a R-squared of 92.76.

VYM’s Mean Return is 0.43 points higher than that of VGK and its R-squared is 3.88 points lower. With a Standard Deviation of 12.69, VYM is slightly less volatile than VGK. The Alpha and Beta of VYM are 1.15 points lower and 0.18 points lower than VGK’s Alpha and Beta.

Performance

Annual Returns

VYM vs. VGK - Annual Returns

Year VYM VGK
2020 1.14% 6.5%
2019 24.2% 24.26%
2018 -5.87% -14.79%
2017 16.42% 27.06%
2016 16.87% -0.59%
2015 0.33% -1.87%
2014 13.47% -6.56%
2013 30.26% 24.93%
2012 12.68% 21.01%
2011 10.5% -11.49%
2010 14.17% 5.01%

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 2017 was the strongest year for VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

VYM vs. VGK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
VGK $10,000 $18,350 6.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

VYM’s CAGR is 5.52 percentage points higher than that of VGK and as a result, would have yielded $15,564 more on a $10,000 investment. Thus, VYM outperformed VGK by 5.52% annually.


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