The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and VHT is a Vanguard Health fund. So, what’s the difference between VYM and VHT? And which fund is better?
The expense ratio of VYM is 0.04 percentage points lower than VHT’s (0.06% vs. 0.1%). VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than VHT over the past ten years.
In this article, we’ll compare VYM vs. VHT. We’ll look at holdings and industry exposure, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VYM’s and VHT’s fund composition, risk metrics, and performance and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||Vanguard Health Care Index Fund ETF Shares|
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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
VYM’s dividend yield is 1.64% higher than that of VHT (2.79% vs. 1.15%). Also, VYM yielded on average 3.84% less per year over the past decade (12.20% vs. 16.04%). The expense ratio of VYM is 0.04 percentage points lower than VHT’s (0.06% vs. 0.1%).
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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 Vanguard Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
VYM is 22.03% more exposed to the Financial Services sector than VHT (22.05% vs 0.02%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 14.13% higher and 85.96% lower respectively (14.13% vs. 0.0% and 13.61% vs. 99.57%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 15.58% more of the fund’s holdings compared to VHT (15.89% vs. 0.31%).
|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%.
|Johnson & Johnson||7.34%|
|UnitedHealth Group Inc||6.44%|
|Thermo Fisher Scientific Inc||3.37%|
|Merck & Co Inc||3.33%|
|Eli Lilly and Co||3.17%|
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
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The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a R-squared of 88.88 with a Mean Return of 1.04 and a Beta of 0.88. Its Standard Deviation is 12.69 while VYM’s Treynor Ratio is 13.24. Furthermore, the fund has a Sharpe Ratio of 0.93 and a Alpha of -0.7.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Alpha of 7.99 with a Treynor Ratio of 20.74 and a Beta of 0.75. Its Mean Return is 1.33 while VHT’s R-squared is 59.86. Furthermore, the fund has a Standard Deviation of 13.58 and a Sharpe Ratio of 1.13.
VYM’s Mean Return is 0.29 points lower than that of VHT and its R-squared is 29.02 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than VHT. The Alpha and Beta of VYM are 8.69 points lower and 0.13 points higher than VHT’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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% 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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
VYM’s CAGR is 3.84 percentage points lower than that of VHT and as a result, would have yielded $14,550 less on a $10,000 investment. Thus, VYM performed worse than VHT by 3.84% annually.
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