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Is Vanguard High Dividend Yield ETF (VYM) a Strong ETF Right Now?
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Making its debut on 11/10/2006, smart beta exchange traded fund Vanguard High Dividend Yield ETF (VYM - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Vanguard, VYM has amassed assets over $54.27 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.06% for VYM, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.85%.
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 22.30% of the portfolio. Its Consumer Staples and Information Technology round out the top three.
Taking into account 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 added roughly 7.92% and it's up approximately 15.06% so far this year and in the past one year (as of 06/19/2024), respectively. VYM has traded between $98.71 and $121.51 during this last 52-week period.
The fund has a beta of 0.84 and standard deviation of 14.17% for the trailing three-year period, which makes VYM a medium risk choice in this particular 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 $54.96 billion in assets, Vanguard Value ETF has $116.63 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?
Making its debut on 11/10/2006, smart beta exchange traded fund Vanguard High Dividend Yield ETF (VYM - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Vanguard, VYM has amassed assets over $54.27 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.06% for VYM, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.85%.
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 22.30% of the portfolio. Its Consumer Staples and Information Technology round out the top three.
Taking into account 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 added roughly 7.92% and it's up approximately 15.06% so far this year and in the past one year (as of 06/19/2024), respectively. VYM has traded between $98.71 and $121.51 during this last 52-week period.
The fund has a beta of 0.84 and standard deviation of 14.17% for the trailing three-year period, which makes VYM a medium risk choice in this particular 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 $54.96 billion in assets, Vanguard Value ETF has $116.63 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.