VYM vs. VT: What’s The Difference?

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

The expense ratio of VYM is 0.02 percentage points lower than VT’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 VT over the past ten years.

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

Summary

VYM VT
Name Vanguard High Dividend Yield Index Fund ETF Shares Vanguard Total World Stock Index Fund ETF Shares
Category Large Value N/A
Issuer Vanguard Vanguard
AUM 48.5B 30.44B
Avg. Return 12.20% 10.42%
Div. Yield 2.79% 1.65%
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 Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% with an expense ratio of 0.08%.

VYM’s dividend yield is 1.14% higher than that of VT (2.79% vs. 1.65%). Also, VYM yielded on average 1.78% more per year over the past decade (12.20% vs. 10.42%). The expense ratio of VYM is 0.02 percentage points lower than VT’s (0.06% vs. 0.08%).

Fund Composition

Industry Exposure

VYM vs. VT - Industry Exposure

VYM VT
Technology 9.77% 19.63%
Industrials 10.14% 10.7%
Energy 7.12% 3.48%
Communication Services 5.91% 9.02%
Utilities 7.27% 2.6%
Healthcare 13.61% 11.58%
Consumer Defensive 14.13% 6.71%
Real Estate 0.02% 3.64%
Financial Services 22.05% 15.36%
Consumer Cyclical 5.57% 12.32%
Basic Materials 4.41% 4.97%

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 Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

VYM is 6.69% more exposed to the Financial Services sector than VT (22.05% vs 15.36%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 7.42% higher and 2.03% higher respectively (14.13% vs. 6.71% and 13.61% vs. 11.58%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 10.42% less of the fund’s holdings compared to VT (15.89% vs. 26.31%).

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%.

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

Risk Analysis

VYM VT
Mean Return 1.04 0.9
R-squared 88.88 99.35
Std. Deviation 12.69 14.19
Alpha -0.7 0.2
Beta 0.88 1.01
Sharpe Ratio 0.93 0.71
Treynor Ratio 13.24 9.5

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

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Alpha of 0.2 with a Mean Return of 0.9 and a Beta of 1.01. Its R-squared is 99.35 while VT’s Standard Deviation is 14.19. Furthermore, the fund has a Sharpe Ratio of 0.71 and a Treynor Ratio of 9.5.

VYM’s Mean Return is 0.14 points higher than that of VT and its R-squared is 10.47 points lower. With a Standard Deviation of 12.69, VYM is slightly less volatile than VT. The Alpha and Beta of VYM are 0.90 points lower and 0.13 points lower than VT’s Alpha and Beta.

Performance

Annual Returns

VYM vs. VT - Annual Returns

Year VYM VT
2020 1.14% 16.74%
2019 24.2% 26.8%
2018 -5.87% -9.67%
2017 16.42% 24.19%
2016 16.87% 8.77%
2015 0.33% -1.88%
2014 13.47% 3.97%
2013 30.26% 22.98%
2012 12.68% 17.33%
2011 10.5% -7.71%
2010 14.17% 13.05%

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 VT, returning 26.8% on an annual basis. The poorest year for VT in the last ten years was 2018, with a yield of -9.67%. Most years the Vanguard Total World Stock Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were 8.77%, 13.05%, and 16.74% respectively.

Portfolio Growth

VYM vs. VT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VYM $10,000 $33,914 12.20%
VT $10,000 $27,739 10.42%

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 VT, the end total would have been $27,739. This equates to a $17,739 profit over 11 years and a compound annual growth rate (CAGR) of 10.42%.

VYM’s CAGR is 1.78 percentage points higher than that of VT and as a result, would have yielded $6,175 more on a $10,000 investment. Thus, VYM outperformed VT by 1.78% annually.


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