The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and VLUE is a iShares Large Value fund. So, what’s the difference between VYM and VLUE? And which fund is better?
The expense ratio of VYM is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%). VYM also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VYM has provided higher returns than VLUE over the past ten years.
In this article, we’ll compare VYM vs. VLUE. We’ll look at industry exposure and performance, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss VYM’s and VLUE’s risk metrics, annual returns, and holdings and examine how these affect their overall returns.
Summary
| VYM | VLUE | |
| Name | Vanguard High Dividend Yield Index Fund ETF Shares | iShares MSCI USA Value Factor ETF |
| Category | Large Value | Large Value |
| Issuer | Vanguard | iShares |
| AUM | 48.5B | 15.95B |
| Avg. Return | 12.20% | 8.91% |
| Div. Yield | 2.79% | 1.89% |
| Expense Ratio | 0.06% | 0.15% |
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 iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.
VYM’s dividend yield is 0.90% higher than that of VLUE (2.79% vs. 1.89%). Also, VYM yielded on average 3.29% more per year over the past decade (12.20% vs. 8.91%). The expense ratio of VYM is 0.09 percentage points lower than VLUE’s (0.06% vs. 0.15%).
Fund Composition
Industry Exposure
| VYM | VLUE | |
| Technology | 9.77% | 26.89% |
| Industrials | 10.14% | 9.14% |
| Energy | 7.12% | 2.42% |
| Communication Services | 5.91% | 10.39% |
| Utilities | 7.27% | 2.68% |
| Healthcare | 13.61% | 14.31% |
| Consumer Defensive | 14.13% | 7.22% |
| Real Estate | 0.02% | 3.19% |
| Financial Services | 22.05% | 10.96% |
| Consumer Cyclical | 5.57% | 10.66% |
| Basic Materials | 4.41% | 2.14% |
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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.
VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.
VYM is 11.09% more exposed to the Financial Services sector than VLUE (22.05% vs 10.96%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 6.91% higher and 0.70% lower respectively (14.13% vs. 7.22% and 13.61% vs. 14.31%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 7.30% less of the fund’s holdings compared to VLUE (15.89% vs. 23.19%).
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%.
| VLUE Holdings | Weight |
| AT&T Inc | 7.13% |
| Intel Corp | 6.14% |
| General Motors Co | 3.19% |
| Micron Technology Inc | 3.14% |
| Cisco Systems Inc | 3.05% |
| International Business Machines Corp | 2.76% |
| Target Corp | 2.38% |
| Citigroup Inc | 2.32% |
| Ford Motor Co | 2.23% |
| Pfizer Inc | 2.17% |
VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.
International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.
Risk Analysis
| VYM | VLUE | |
| Mean Return | 1.04 | 0 |
| R-squared | 88.88 | 0 |
| Std. Deviation | 12.69 | 0 |
| Alpha | -0.7 | 0 |
| Beta | 0.88 | 0 |
| Sharpe Ratio | 0.93 | 0 |
| Treynor Ratio | 13.24 | 0 |
The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Mean Return of 1.04 with a Sharpe Ratio of 0.93 and a R-squared of 88.88. Its Alpha is -0.7 while VYM’s Treynor Ratio is 13.24. Furthermore, the fund has a Standard Deviation of 12.69 and a Beta of 0.88.
The iShares MSCI USA Value Factor ETF (VLUE) has a R-squared of 0 with a Standard Deviation of 0 and a Mean Return of 0. Its Treynor Ratio is 0 while VLUE’s Beta is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.
VYM’s Mean Return is 1.04 points higher than that of VLUE and its R-squared is 88.88 points higher. With a Standard Deviation of 12.69, VYM is slightly more volatile than VLUE. The Alpha and Beta of VYM are 0.70 points lower and 0.88 points higher than VLUE’s Alpha and Beta.
Performance
Annual Returns
| Year | VYM | VLUE |
| 2020 | 1.14% | -0.32% |
| 2019 | 24.2% | 27.47% |
| 2018 | -5.87% | -11.18% |
| 2017 | 16.42% | 21.97% |
| 2016 | 16.87% | 15.68% |
| 2015 | 0.33% | -3.54% |
| 2014 | 13.47% | 12.29% |
| 2013 | 30.26% | 0.0% |
| 2012 | 12.68% | 0.0% |
| 2011 | 10.5% | 0.0% |
| 2010 | 14.17% | 0.0% |
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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| VYM | $10,000 | $18,315 | 12.20% |
| VLUE | $10,000 | $17,247 | 8.91% |
A $10,000 investment in VYM would have resulted in a final balance of $18,315. This is a profit of $8,315 over 7 years and amounts to a compound annual growth rate (CAGR) of 12.20%.
With a $10,000 investment in VLUE, the end total would have been $17,247. This equates to a $7,247 profit over 7 years and a compound annual growth rate (CAGR) of 8.91%.
VYM’s CAGR is 3.29 percentage points higher than that of VLUE and as a result, would have yielded $1,068 more on a $10,000 investment. Thus, VYM outperformed VLUE by 3.29% annually.
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