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 | 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 | 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 | 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
| 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
| 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.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
2) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
3) If you are interested in crypto, check out Gemini. I've started allocating a small amount of assets to the growing crypto space and Gemini has just been a breeze to use. Once you register, make sure to also open an Active Trader account to buy crypto at the lowest fees on the market (just 0.03%!).
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I started this blog because I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
My current investment strategy involves investing most of my capital in Vanguard funds through M1 Finance. I use the dividends (plus their 'borrow' option) to invest in real estate deals with Fundrise. Finally, I invest the real estate distributions into various crypto assets using Gemini.
Click here to learn more about my personal investment strategy for financial freedom.
