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Should Vanguard High Dividend Yield ETF (VYM) Be on Your Investing Radar?

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Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Vanguard High Dividend Yield ETF (VYM - Free Report) is a passively managed exchange traded fund launched on 11/10/2006.

The fund is sponsored by Vanguard. It has amassed assets over $47.27 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.


When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.06%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 3.06%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 20.50% of the portfolio. Healthcare and Consumer Staples round out the top three.

Looking at individual holdings, Johnson & Johnson (JNJ - Free Report) accounts for about 3.28% of total assets, followed by Exxon Mobil Corp. (XOM - Free Report) and Jpmorgan Chase & Co. (JPM - Free Report) .

The top 10 holdings account for about 23.11% of total assets under management.

Performance and Risk

VYM seeks to match the performance of the FTSE High Dividend Yield Index before fees and expenses. The FTSE High Dividend Yield Index which is consists of common stocks of companies that pay dividends that generally are higher than average.

The ETF has lost about -4.74% so far this year and is down about -1.59% in the last one year (as of 11/04/2022). In the past 52-week period, it has traded between $94.88 and $115.01.

The ETF has a beta of 0.86 and standard deviation of 23.27% for the trailing three-year period, making it a medium risk choice in the space. With about 445 holdings, it effectively diversifies company-specific risk.


Vanguard High Dividend Yield ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VYM is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $51.72 billion in assets, Vanguard Value ETF has $99.37 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.


While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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