VNQ vs VYM: What’s The Difference? 2023
The Vanguard Real Estate ETF (VNQ) and the Vanguard High Dividend Yield ETF (VYM) are both interesting ETFs. VNQ tracks MSCI US Investable Market Real Estate 25/50 Index and VYM tracks FTSE Custom High Dividend Yield. So, what’s the difference between VNQ vs VYM? And which fund is better?
VNQ vs VYM: The expense ratio of VNQ is 0.12% and VYM is 0.06%. VNQ’s biggest holding is Vanguard Real Estate II Index and VYM’s biggest holding is Exxon Mobil Corp. Overall, VNQ has provided -3.19% Lower returns than VYM over the past ten years.
In this article, we’ll compare VNQ vs VYM. We’ll look at holdings and performance, as well as at their portfolio growth and annual returns. Moreover, I’ll also discuss VNQ’s and VYM’s industry exposure, risk metrics, fund composition and examine how these affect their overall returns.Looking for something else? Search below ETF vs ETF or any other topic you need!
Summary VNQ vs VYM
VYM vs VNQ Table
| BND | IUSB | |
| Name | Vanguard Real Estate ETF | Vanguard High Dividend Yield ETF |
| Category | Real Estate | Large Value |
| Issuer | Vanguard | Vanguard |
| AUM | $59.54B | $57.98B |
| Avg. Return | 8.94% | 12.14% |
| Div. Yield | 4.27% | 3.26% |
| Expense Ratio | 0.12% | 0.06% |
The Vanguard Real Estate ETF (VNQ) is a MSCI US Investable Market Real Estate 25/50 Index fund that is issued by Vanguard. It currently has $59.54B total assets under management and has yielded an average annual return of 8.94% over the past 10 years. The fund has a dividend yield of 4.27% with an expense ratio of 0.12%.
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%.
VNQ’s dividend yield is Higher than that of VYM (4.27% vs 3.26%). Also, VNQ yielded on average -3.19% Lower per year over the past decade (8.94% vs 12.14%). The expense ratio of VNQ is 0.06% percentage points Higher than VYM’s (0.12% vs 0.06%).
Fund Composition VNQ vs VYM
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Industry Exposure Table vs VNQ
Industry Chart
| VNQ | VYM | |
| Technology | 0.08% | 0.0955 |
| Industrials | 0.00% | 0.1166 |
| Energy | 0.00% | 0.1035 |
| Communication Services | 0.78% | 0.0372 |
| Utilities | 0.00% | 0.0741 |
| Healthcare | 0.00% | 0.1402 |
| Consumer Defensive | 0.00% | 0.1483 |
| Real Estate | 97.97% | 0.0001 |
| Financial Services | 0.00% | 0.1924 |
| Consumer Cyclical | 0.00% | 0.0686 |
| Basic Materials | 0 | 0.0224 |
The Vanguard Real Estate ETF (VNQ) has the most exposure to the Real Estate sector at 97.97%. This is followed by Communication Services and Technology at 2.04% and 0.78% respectively. Basic Materials (0.00%), Basic Materials (0.00%), and Basic Materials (0.00%) only make up 0.00% of the fund’s total assets.
VNQ’s middle weighted sectors is made up with moderate exposure to Basic Materials, Basic Materials, Basic Materials, Basic Materials, and Basic Materials stocks at 0.00%, 0.00%, 0.00%, 0.00%, and 0.08%.
The Vanguard High Dividend Yield ETF (VYM) has the most exposure to the Financial Services sector at 0.1924. This is followed by Consumer Defensive and Healthcare at 0.1483 and 0.1402 respectively. Real Estate (0.019), Basic Materials (0.0224), and Communication Services (0.0372) only make up 0.0786 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 0.0686, 0.0741, 0.0955, 0.00%, and 0.08%.
VNQ is 97.96% More exposed to the Real Estate sector than VYM (97.97% vs 0.01%). VNQ’s exposure to Communication Services and Technology stocks is -1.68% Less and -8.77% Less respectively (2.04% vs. 3.72%) and (0.78% vs. 9.55%).
In total, VNQ’s bottom three industries, Basic Materials, Basic Materials, and Basic Materials also make up -7.86% Lower of the fund’s holdings compared to VYM’s bottom three industries. (0.00% vs. 0.0786).
Holdings Vanguard Real Estate ETF (VNQ)
| VNQ Holdings | Weight |
| Vanguard Real Estate II Index | 0.1259 |
| Prologis Inc | 0.0827 |
| American Tower Corp | 0.0618 |
| Equinix Inc | 0.0501 |
| Crown Castle Inc | 0.0353 |
| Public Storage | 0.0322 |
| Realty Income Corp | 0.0282 |
| Welltower Inc | 0.0257 |
| Simon Property Group Inc | 0.024 |
| Digital Realty Trust Inc | 0.0204 |
VNQ’s Top Holdings are Vanguard Real Estate II Index, Prologis Inc, American Tower Corp, Equinix Inc, and Crown Castle Inc at 0.1259, 0.0827, 0.0618, 0.0501, and 0.0353.
Public Storage (0.0322), Realty Income Corp (0.0282), and Welltower Inc (0.0257) have a slightly smaller but still significant weight. Simon Property Group Inc and Digital Realty Trust Inc are also represented in the VNQ’s holdings at 0.024 and 0.0204.
Holdings Vanguard High Dividend Yield ETF (VYM)
| VNQ Holdings | Weight |
| Exxon Mobil Corp | 0.0328 |
| Johnson & Johnson | 0.0318 |
| JPMorgan Chase & Co | 0.0309 |
| Procter & Gamble Co | 0.0262 |
| Broadcom Inc | 0.0249 |
| Chevron Corp | 0.0227 |
| The Home Depot Inc | 0.0225 |
| Merck & Co Inc | 0.0218 |
| PepsiCo Inc | 0.0197 |
| AbbVie Inc | 0.019 |
VNQ’s Top Holdings are Exxon Mobil Corp, Johnson & Johnson, JPMorgan Chase & Co, Procter & Gamble Co, and Broadcom Inc at 0.0328, 0.0318, 0.0309, 0.0262, and 0.0249.
Chevron Corp (0.0227), The Home Depot Inc (0.0225), and Merck & Co Inc (0.0218) have a slightly smaller but still significant weight. PepsiCo Inc and AbbVie Inc are also represented in the ’s holdings at 0.0197 and 0.019.
Risk Analysis VNQ vs VYM
| SCHD | SDY | |
| Mean Return | 0.55 | 1.02 |
| R-squared | 77.32 | 72.94 |
| Std. Deviation | 20.04 | 16.26 |
| Alpha | -4.74 | 1.23 |
| Beta | 1.04 | 0.78 |
| Sharpe Ratio | 0.26 | 0.66 |
| Treynor Ratio | 3.24 | 13.03 |
The Vanguard Real Estate ETF has a Standard Deviation of 20.04 with a Alpha of -4.74 and a Treynor Ratio of 3.24. Its Sharpe Ratio is 0.26 while VNQ’s Beta is 1.04. Furthermore, the fund has a Mean Return of 0.55 and a R-squared of 77.32.
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 VNQ vs VYM
Annual Returns VNQ vs VYM
| Year | VNQ | VYM |
| 2022 | -26.24% | -0.0046 |
| 2021 | 40.52% | 0.2621 |
| 2020 | -4.68% | 0.0114 |
| 2019 | 28.87% | 0.2407 |
| 2018 | -6.02% | -0.0591 |
| 2017 | 4.91% | 0.1642 |
| 2016 | 8.60% | 0.1705 |
| 2015 | 2.42% | 0.0028 |
| 2014 | 30.36% | 0.1352 |
| 2013 | 2.31% | 0.3008 |
| 2012 | 17.63% | 0.1269 |
| 2011 | 8.62% | 0.1054 |
VNQ had its best year in 2021 with an annual return of 40.52%. VNQ’s worst year over the past decade yielded -26.24% and occurred in 2022. In most years the Vanguard Real Estate ETF provided moderate returns such as in 2014, 2019, and 2012 where annual returns amounted to 13.55%, 31.35%, and 16.00% respectively.
The year 2013 was the strongest year for VYM, returning 0.3008 on an annual basis. The poorest year for VYM in the last ten years was 2018, with a yield of -0.0591. 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 VNQ vs VYM
| Fund | Initial Balance | Final Balance | CAGR |
| VNQ | $10,000 | $21,054.26 | 8.62% |
| VYM | $10,000 | $26,714.94 | 11.54% |
A $10,000 investment in VNQ would have resulted in a final balance of $21,054.26. This is a profit of $11,054.26 over 10 years and amounts to a compound annual growth rate (CAGR) of 8.62%.
With a $10,000 investment in VYM, the end total would have been $26,714.94. This equates to a $16,714.94 profit over 10 years and a compound annual growth rate (CAGR) of 11.54%.
VYM’s CAGR is 2.91% Higher than that of VNQ and as a result, would have yielded $5,660.68 More on a $10,000 investment. Thus, VYM Overperformed VNQ by $566.07 annually.
