VYM vs. VOE: What’s The Difference?

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

The expense ratio of VYM is 0.01 percentage points lower than VOE’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 VOE over the past ten years.

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

Summary

VYM VOE
Name Vanguard High Dividend Yield Index Fund ETF Shares Vanguard Mid-Cap Value Index Fund ETF Shares
Category Large Value Mid-Cap Value
Issuer Vanguard Vanguard
AUM 48.5B 26.78B
Avg. Return 12.20% 12.52%
Div. Yield 2.79% 1.87%
Expense Ratio 0.06% 0.07%

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 Mid-Cap Value Index Fund ETF Shares (VOE) is a Mid-Cap Value fund that is issued by Vanguard. It currently has 26.78B total assets under management and has yielded an average annual return of 12.52% over the past 10 years. The fund has a dividend yield of 1.87% with an expense ratio of 0.07%.

VYM’s dividend yield is 0.92% higher than that of VOE (2.79% vs. 1.87%). Also, VYM yielded on average 0.33% less per year over the past decade (12.20% vs. 12.52%). The expense ratio of VYM is 0.01 percentage points lower than VOE’s (0.06% vs. 0.07%).

Fund Composition

Industry Exposure

VYM vs. VOE - Industry Exposure

VYM VOE
Technology 9.77% 9.85%
Industrials 10.14% 9.4%
Energy 7.12% 5.69%
Communication Services 5.91% 5.27%
Utilities 7.27% 10.93%
Healthcare 13.61% 7.04%
Consumer Defensive 14.13% 4.85%
Real Estate 0.02% 11.48%
Financial Services 22.05% 18.26%
Consumer Cyclical 5.57% 11.8%
Basic Materials 4.41% 5.44%

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 Mid-Cap Value Index Fund ETF Shares (VOE) has the most exposure to the Financial Services sector at 18.26%. This is followed by Consumer Cyclical and Real Estate at 11.8% and 11.48% respectively. Communication Services (5.27%), Basic Materials (5.44%), and Energy (5.69%) only make up 16.40% of the fund’s total assets.

VOE’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Technology, Utilities, and Real Estate stocks at 7.04%, 9.4%, 9.85%, 10.93%, and 11.48%.

VYM is 3.79% more exposed to the Financial Services sector than VOE (22.05% vs 18.26%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 9.28% higher and 6.57% higher respectively (14.13% vs. 4.85% and 13.61% vs. 7.04%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 6.62% less of the fund’s holdings compared to VOE (15.89% vs. 22.51%).

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%.

VOE - Holdings

VOE Holdings Weight
Carrier Global Corp Ordinary Shares 1.28%
International Flavors & Fragrances Inc 1.13%
Motorola Solutions Inc 1.12%
Discover Financial Services 1.09%
Welltower Inc 1.05%
Corteva Inc 0.99%
Valero Energy Corp 0.97%
Corning Inc 0.95%
Willis Towers Watson PLC 0.9%
D.R. Horton Inc 0.89%

VOE’s Top Holdings are Carrier Global Corp Ordinary Shares, International Flavors & Fragrances Inc, Motorola Solutions Inc, Discover Financial Services, and Welltower Inc at 1.28%, 1.13%, 1.12%, 1.09%, and 1.05%.

Corteva Inc (0.99%), Valero Energy Corp (0.97%), and Corning Inc (0.95%) have a slightly smaller but still significant weight. Willis Towers Watson PLC and D.R. Horton Inc are also represented in the VOE’s holdings at 0.9% and 0.89%.

Risk Analysis

VYM VOE
Mean Return 1.04 1.05
R-squared 88.88 88.76
Std. Deviation 12.69 15.98
Alpha -0.7 -3.77
Beta 0.88 1.11
Sharpe Ratio 0.93 0.75
Treynor Ratio 13.24 10.19

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

The Vanguard Mid-Cap Value Index Fund ETF Shares (VOE) has a Standard Deviation of 15.98 with a Treynor Ratio of 10.19 and a R-squared of 88.76. Its Sharpe Ratio is 0.75 while VOE’s Beta is 1.11. Furthermore, the fund has a Mean Return of 1.05 and a Alpha of -3.77.

VYM’s Mean Return is 0.01 points lower than that of VOE and its R-squared is 0.12 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than VOE. The Alpha and Beta of VYM are 3.07 points higher and 0.23 points lower than VOE’s Alpha and Beta.

Performance

Annual Returns

VYM vs. VOE - Annual Returns

Year VYM VOE
2020 1.14% 2.5%
2019 24.2% 27.98%
2018 -5.87% -12.41%
2017 16.42% 17.05%
2016 16.87% 15.26%
2015 0.33% -1.8%
2014 13.47% 13.98%
2013 30.26% 37.65%
2012 12.68% 16.04%
2011 10.5% -0.32%
2010 14.17% 21.83%

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 VOE, returning 37.65% on an annual basis. The poorest year for VOE in the last ten years was 2018, with a yield of -12.41%. Most years the Vanguard Mid-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2016, and 2012, when gains were 13.98%, 15.26%, and 16.04% respectively.

Portfolio Growth

VYM vs. VOE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
VOE $10,000 $33,655 12.52%

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 VOE, the end total would have been $33,655. This equates to a $23,655 profit over 11 years and a compound annual growth rate (CAGR) of 12.52%.

VYM’s CAGR is 0.33 percentage points lower than that of VOE and as a result, would have yielded $259 more on a $10,000 investment. Thus, VYM performed worse than VOE by 0.33% annually.


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