The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. VYM is a Vanguard Large Value fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between VYM and VXF? And which fund is better?
VYM and VXF have the same expense ratio: 0.06%. VYM also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VYM has provided lower returns than VXF over the past ten years.
In this article, we’ll compare VYM vs. VXF. We’ll look at industry exposure and risk metrics, as well as at their performance and fund composition. Moreover, I’ll also discuss VYM’s and VXF’s holdings, portfolio growth, and annual returns and examine how these affect their overall returns.
|Name||Vanguard High Dividend Yield Index Fund ETF Shares||Vanguard Extended Market Index Fund ETF Shares|
|Category||Large Value||Mid-Cap Growth|
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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.
VYM’s dividend yield is 1.60% higher than that of VXF (2.79% vs. 1.19%). Also, VYM yielded on average 3.28% less per year over the past decade (12.20% vs. 15.47%). VYM and VXF have the same expense ratio: 0.06%.
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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 Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.
VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.
VYM is 9.49% more exposed to the Financial Services sector than VXF (22.05% vs 12.56%). VYM’s exposure to Consumer Defensive and Healthcare stocks is 11.04% higher and 1.64% lower respectively (14.13% vs. 3.09% and 13.61% vs. 15.25%). In total, Basic Materials, Consumer Cyclical, and Communication Services also make up 6.01% less of the fund’s holdings compared to VXF (15.89% vs. 21.90%).
|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%.
|Square Inc A||1.2%|
|Zoom Video Communications Inc||1.04%|
|Uber Technologies Inc||0.93%|
|Blackstone Group Inc||0.83%|
|Snap Inc Class A||0.8%|
|Twilio Inc A||0.73%|
|CrowdStrike Holdings Inc Class A||0.63%|
|Marvell Technology Inc||0.6%|
VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.
Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.
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The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a Standard Deviation of 12.69 with a Sharpe Ratio of 0.93 and a Alpha of -0.7. Its Beta is 0.88 while VYM’s Treynor Ratio is 13.24. Furthermore, the fund has a Mean Return of 1.04 and a R-squared of 88.88.
The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Treynor Ratio of 10.92 with a Alpha of -3.26 and a Beta of 1.23. Its R-squared is 85.73 while VXF’s Mean Return is 1.24. Furthermore, the fund has a Sharpe Ratio of 0.79 and a Standard Deviation of 18.04.
VYM’s Mean Return is 0.20 points lower than that of VXF and its R-squared is 3.15 points higher. With a Standard Deviation of 12.69, VYM is slightly less volatile than VXF. The Alpha and Beta of VYM are 2.56 points higher and 0.35 points lower than VXF’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 VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% 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 VXF, the end total would have been $44,130. This equates to a $34,130 profit over 11 years and a compound annual growth rate (CAGR) of 15.47%.
VYM’s CAGR is 3.28 percentage points lower than that of VXF and as a result, would have yielded $10,216 less on a $10,000 investment. Thus, VYM performed worse than VXF by 3.28% annually.
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