The Vanguard Growth ETF (VUG) and the Vanguard High Dividend Yield ETF (VYM) are both interesting ETFs. VUG tracks CRSP U.S. Large Cap Growth Index and VYM tracks FTSE Custom High Dividend Yield. So, what’s the difference between VUG vs VYM? And which fund is better?
VUG vs VYM: The expense ratio of VUG is 0.04% and VYM is 0.06%. VUG’s biggest holding is Apple Inc and VYM’s biggest holding is Exxon Mobil Corp. Overall, VUG has provided 2.06% Higher returns than VYM over the past ten years.In this article, we’ll compare VUG vs VYM. We’ll look at holdings and performance, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VUG’s and VYM’s industry exposure, risk metrics, fund composition and examine how these affect their overall returns.
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Summary VUG vs VYM
VYM vs VUG Table
|Name||Vanguard Growth ETF||Vanguard High Dividend Yield ETF|
|Category||Large Growth||Large Value|
The Vanguard Growth ETF (VUG) is a CRSP U.S. Large Cap Growth Index fund that is issued by Vanguard. It currently has $166.4B total assets under management and has yielded an average annual return of 14.19% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.04%.
The Vanguard High Dividend Yield ETF (VYM) is a FTSE Custom High Dividend Yield that is issued by Vanguard. It currently has $57.98B total assets under management and has yielded an average annual return of 12.14% over the past 10 years. The fund has a dividend yield of 3.26% with an expense ratio of 0.06%.
VUG’s dividend yield is Lower than that of VYM (0.61% vs 3.26%). Also, VUG yielded on average 2.06% Higher per year over the past decade (14.19% vs 12.14%). The expense ratio of VUG is -0.02% percentage points Lower than VYM’s (0.04% vs 0.06%).
Fund Composition VUG vs VYM
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Industry Exposure Table vs VUG
The Vanguard Growth ETF (VUG) has the most exposure to the Technology sector at 45.54%. This is followed by Consumer Cyclical and Communication Services at 16.46% and 11.79% respectively. Energy (1.19%), #10 Weight (1.59%), and Basic Materials (1.75%) only make up 4.53% of the fund’s total assets.
VUG’s middle weighted sectors is made up with moderate exposure to Real Estate, Consumer Defensive, Industrials, Financial Services, and Healthcare stocks at 1.99%, 2.42%, 3.96%, 5.92%, and 8.64%.
The Vanguard High Dividend Yield ETF (VYM) has the most exposure to the Financial Services sector at 19.24%. This is followed by Consumer Defensive and Healthcare at 14.83% and 14.02% respectively. #10 Weight (1.90%), Basic Materials (2.24%), and Communication Services (3.72%) only make up 7.86% of the fund’s total assets.
VYM’s middle weighted sectors is made up with moderate exposure to Consumer Cyclical, Utilities, Technology, Energy, and Industrials stocks at 6.86%, 7.41%, 9.55%, 5.92%, and 8.64%.
VUG is 35.99% More exposed to the Technology sector than VYM (45.54% vs 9.55%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 9.60% More and 8.07% More respectively (16.46% vs. 6.86%) and (11.79% vs. 3.72%).
In total, VUG’s bottom three industries, Basic Materials, #10 Weight, and Energy also make up -3.33% Lower of the fund’s holdings compared to VYM’s bottom three industries. (4.53% vs. 7.86%).
Holdings Vanguard Growth ETF (VUG)
|Alphabet Inc Class A||3.73%|
|Alphabet Inc Class C||3.19%|
|Eli Lilly and Co||1.87%|
|Visa Inc Class A||1.77%|
|Mastercard Inc Class A||1.59%|
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, NVIDIA Corp, and Alphabet Inc Class A at 13.60%, 12.48%, 5.36%, 4.51%, and 3.73%.
Alphabet Inc Class C (3.19%), Tesla Inc (2.80%), and Eli Lilly and Co (1.87%) have a slightly smaller but still significant weight. Visa Inc Class A and Mastercard Inc Class A are also represented in the VUG’s holdings at 1.77% and 1.59%.
Holdings Vanguard High Dividend Yield ETF (VYM)
|Exxon Mobil Corp||3.28%|
|Johnson & Johnson||3.18%|
|JPMorgan Chase & Co||3.09%|
|Procter & Gamble Co||2.62%|
|The Home Depot Inc||2.25%|
|Merck & Co Inc||2.18%|
VUG’s Top Holdings are Exxon Mobil Corp, Johnson & Johnson, JPMorgan Chase & Co, Procter & Gamble Co, and Broadcom Inc at 3.28%, 3.18%, 3.09%, 2.62%, and 2.49%.
Chevron Corp (2.27%), The Home Depot Inc (2.25%), and Merck & Co Inc (2.18%) have a slightly smaller but still significant weight. PepsiCo Inc and AbbVie Inc are also represented in the ’s holdings at 1.97% and 1.90%.
Risk Analysis VUG vs VYM
The Vanguard Growth ETF has a Standard Deviation of 22.64 with a Alpha of -2.31 and a Treynor Ratio of 8.76. Its Sharpe Ratio is 0.54 while VUG’s Beta is 1.18. Furthermore, the fund has a Mean Return of 1.14 and a R-squared of 88.1.
The VYM has a R-squared of 72.94 with a Mean Return of 1.02 and a Standard Deviation of 16.26. Its Sharpe Ratio is 0.66 while VYM’s Alpha is 1.231. Furthermore, the fund has a Beta of 0.78 and a Treynor Ratio of 13.03.
Performance VUG vs VYM
Annual Returns VUG vs VYM
VUG had its best year in 2020 with an annual return of 40.22%. VUG’s worst year over the past decade yielded -33.15% and occurred in 2022. In most years the Vanguard Growth ETF provided moderate returns such as in 2019, 2013, and 2017 where annual returns amounted to 31.35%, 32.39%, and 21.77% respectively.
The year 2013 was the strongest year for VYM, returning 30.08% on an annual basis. The poorest year for VYM in the last ten years was 2018, with a yield of -5.91%. Most years the Vanguard High Dividend Yield ETF has given investors modest returns, such as in 2021, 2019, and 2016, when gains were 17.56%, 27.32%, and 18.44% respectively.
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Performance Comparison VUG vs VYM
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VUG would have resulted in a final balance of $30,750.02. This is a profit of $20,750.02 over 10 years and amounts to a compound annual growth rate (CAGR) of 13.29%.
With a $10,000 investment in VYM, the end total would have been $30,411.76. This equates to a $20,411.76 profit over 10 years and a compound annual growth rate (CAGR) of 13.15%.
VYM’s CAGR is -0.14% Lower than that of VUG and as a result, would have yielded -$338.26 Less on a $10,000 investment. Thus, VYM Underperformed VUG by -$33.83 annually.