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Is Vanguard High Dividend Yield ETF (VYM) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the Vanguard High Dividend Yield ETF (VYM - Free Report) is a smart beta exchange traded fund launched on 11/10/2006.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by Vanguard. It has amassed assets over $52.57 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, VYM 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.06%.
It's 12-month trailing dividend yield comes in at 2.94%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 22.50% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Staples round out the top three.
When you look at individual holdings, Broadcom Inc (AVGO - Free Report) accounts for about 3.86% of the fund's total assets, followed by Jpmorgan Chase & Co (JPM - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
Performance and Risk
The ETF has gained about 4.59% and is up roughly 12.23% so far this year and in the past one year (as of 04/15/2024), respectively. VYM has traded between $98.71 and $120.99 during this last 52-week period.
VYM has a beta of 0.84 and standard deviation of 14.19% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 457 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 $53.85 billion in assets, Vanguard Value ETF has $111.46 billion. IWD has an expense ratio of 0.19% 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?
Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the Vanguard High Dividend Yield ETF (VYM - Free Report) is a smart beta exchange traded fund launched on 11/10/2006.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by Vanguard. It has amassed assets over $52.57 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, VYM 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.06%.
It's 12-month trailing dividend yield comes in at 2.94%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 22.50% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Staples round out the top three.
When you look at individual holdings, Broadcom Inc (AVGO - Free Report) accounts for about 3.86% of the fund's total assets, followed by Jpmorgan Chase & Co (JPM - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
Performance and Risk
The ETF has gained about 4.59% and is up roughly 12.23% so far this year and in the past one year (as of 04/15/2024), respectively. VYM has traded between $98.71 and $120.99 during this last 52-week period.
VYM has a beta of 0.84 and standard deviation of 14.19% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 457 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 $53.85 billion in assets, Vanguard Value ETF has $111.46 billion. IWD has an expense ratio of 0.19% 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.