We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Vanguard High Dividend Yield ETF (VYM) a Strong ETF Right Now?
Read MoreHide Full Article
A smart beta exchange traded fund, the Vanguard High Dividend Yield ETF (VYM - Free Report) debuted on 11/10/2006, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $60.36 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Value. VYM is managed by Vanguard. 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.06% for this ETF, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.76%.
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.
VYM's heaviest allocation is in the Financials sector, which is about 22.10% of the portfolio. Its Consumer Staples and Industrials round out the top three.
Taking into account individual holdings, Broadcom Inc (AVGO - Free Report) accounts for about 4.20% of the fund's total assets, followed by Jpmorgan Chase & Co (JPM - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
Performance and Risk
Year-to-date, the Vanguard High Dividend Yield ETF return is roughly 20% so far, and it's up approximately 31.06% over the last 12 months (as of 10/21/2024). VYM has traded between $98.71 and $131.47 in this past 52-week period.
VYM has a beta of 0.83 and standard deviation of 14.05% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 557 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $63.90 billion in assets, Vanguard Value ETF has $130.72 billion. SCHD has an expense ratio of 0.06% 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Vanguard High Dividend Yield ETF (VYM) a Strong ETF Right Now?
A smart beta exchange traded fund, the Vanguard High Dividend Yield ETF (VYM - Free Report) debuted on 11/10/2006, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $60.36 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Value. VYM is managed by Vanguard. 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.06% for this ETF, which makes it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.76%.
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.
VYM's heaviest allocation is in the Financials sector, which is about 22.10% of the portfolio. Its Consumer Staples and Industrials round out the top three.
Taking into account individual holdings, Broadcom Inc (AVGO - Free Report) accounts for about 4.20% of the fund's total assets, followed by Jpmorgan Chase & Co (JPM - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
Performance and Risk
Year-to-date, the Vanguard High Dividend Yield ETF return is roughly 20% so far, and it's up approximately 31.06% over the last 12 months (as of 10/21/2024). VYM has traded between $98.71 and $131.47 in this past 52-week period.
VYM has a beta of 0.83 and standard deviation of 14.05% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 557 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $63.90 billion in assets, Vanguard Value ETF has $130.72 billion. SCHD has an expense ratio of 0.06% 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.