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Is Vanguard High Dividend Yield ETF (VYM) a Strong ETF Right Now?
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Launched on 11/10/2006, the Vanguard High Dividend Yield ETF (VYM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
VYM is managed by Vanguard, and this fund has amassed over $46.66 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. VYM, before fees and expenses, seeks to match the performance of the FTSE High Dividend Yield Index.
The FTSE High Dividend Yield Index which is consists of common stocks of companies that pay dividends that generally are higher than average.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.06%.
The fund has a 12-month trailing dividend yield of 3.26%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
VYM's heaviest allocation is in the Financials sector, which is about 19.20% of the portfolio. Its Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Johnson & Johnson (JNJ - Free Report) accounts for about 3.17% of total assets, followed by Exxon Mobil Corp. (XOM - Free Report) and Jpmorgan Chase & Co. (JPM - Free Report) .
VYM's top 10 holdings account for about 6.31% of its total assets under management.
Performance and Risk
The ETF has lost about -5.70% so far this year and is down about -7% in the last one year (as of 03/23/2023). In the past 52-week period, it has traded between $94.88 and $114.57.
The ETF has a beta of 0.85 and standard deviation of 19.26% for the trailing three-year period, making it a medium risk choice in the space. With about 442 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard High Dividend Yield ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $49.04 billion in assets, Vanguard Value ETF has $97.83 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
Bottom Line
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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Is Vanguard High Dividend Yield ETF (VYM) a Strong ETF Right Now?
Launched on 11/10/2006, the Vanguard High Dividend Yield ETF (VYM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
VYM is managed by Vanguard, and this fund has amassed over $46.66 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. VYM, before fees and expenses, seeks to match the performance of the FTSE High Dividend Yield Index.
The FTSE High Dividend Yield Index which is consists of common stocks of companies that pay dividends that generally are higher than average.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.06%.
The fund has a 12-month trailing dividend yield of 3.26%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
VYM's heaviest allocation is in the Financials sector, which is about 19.20% of the portfolio. Its Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Johnson & Johnson (JNJ - Free Report) accounts for about 3.17% of total assets, followed by Exxon Mobil Corp. (XOM - Free Report) and Jpmorgan Chase & Co. (JPM - Free Report) .
VYM's top 10 holdings account for about 6.31% of its total assets under management.
Performance and Risk
The ETF has lost about -5.70% so far this year and is down about -7% in the last one year (as of 03/23/2023). In the past 52-week period, it has traded between $94.88 and $114.57.
The ETF has a beta of 0.85 and standard deviation of 19.26% for the trailing three-year period, making it a medium risk choice in the space. With about 442 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard High Dividend Yield ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $49.04 billion in assets, Vanguard Value ETF has $97.83 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
Bottom Line
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.