VYM
Vanguard High Dividend Yield ETF
VYM tracks the FTSE High Dividend Yield Index, focusing on U.S. companies with above-average dividend yields. Screens for sustainable dividend payments with market-cap weighting. Provides diversified exposure to value-oriented, income-producing companies.
VTI
Vanguard Total Stock Market ETF
VTI tracks the CRSP US Total Market Index, providing exposure to the entire U.S. stock market. Includes large, mid, small, and micro-cap stocks across all sectors. Represents the broadest possible diversification within U.S. equities.
Key Metrics Comparison
| Metric | VYM | VTI | Winner |
|---|---|---|---|
| Dividend Yield | 3.05% | 1.45% | VYM (+1.60%) |
| Expense Ratio | 0.06% | 0.03% | VTI (-0.03%) |
| 10-Year Annual Return | 10.1% | 11.8% | VTI (+1.7%) |
| Number of Holdings | 447 | 3,740 | VTI (8.4x more) |
| Assets Under Management | $58.2B | $380.5B | VTI |
| P/E Ratio | 15.2 | 21.8 | VYM (cheaper) |
| Price/Book Ratio | 2.8 | 4.1 | VYM (cheaper) |
| Beta vs S&P 500 | 0.82 | 1.00 | VYM (lower risk) |
Performance Comparison
VYM Performance
Higher dividend yield with lower total returns. Concentrated in value sectors. More defensive characteristics. Lower volatility during market downturns. Outperforms during value/income-focused markets. Underperforms during growth/tech leadership.
VTI Performance
Lower yield with higher total returns. Complete market representation. Captures growth from all sectors and sizes. Higher long-term returns due to growth exposure. More volatile but better absolute returns. Perfect benchmark for U.S. equity performance.
Strategy Analysis
VYM Approach
High dividend yield income strategy:
- Tracks FTSE High Dividend Yield Index
- Focus on above-average dividend yield companies
- Screens for sustainable dividend payments
- Market-cap weighted methodology
- Value and income-oriented
- Heavy financials and utilities exposure
- Lower growth, higher income focus
- Defensive positioning
VTI Approach
Total market core holding strategy:
- Tracks CRSP US Total Market Index
- Complete U.S. stock market coverage
- Includes all market caps (large to micro)
- Market-cap weighted methodology
- No style or sector bias
- Pure market representation
- Maximum diversification
- Ultimate core holding
Portfolio Construction & Weighting Differences
VYM's value focus creates dramatically different sector exposure compared to VTI's market representation.
Sector Construction
VYM: Heavy financials (23%), healthcare (14%), consumer staples (13%)
VTI: Technology (28%), healthcare (13%), financials (11%)
Tech Exposure: VYM 8% vs VTI 28%
Value Tilt: VYM extreme, VTI neutral
Market Cap Distribution
VYM: 100% large-cap (no mid/small)
VTI: 71% large, 19% mid, 10% small/micro
Small-Cap Exposure: VYM 0% vs VTI 10%
Growth Exposure: VYM limited, VTI complete
Concentration & Diversification
Top 10 Holdings %: VYM 22% vs VTI 25%
Industry Diversification: VYM 8x less diversified
Company Count: VYM 447 vs VTI 3,740
Style Consistency: VYM value-only, VTI style-neutral
Diversification & Risk Management Comparison
VTI offers vastly superior diversification across companies, sectors, and market caps.
Company Diversification
Market Cap Coverage
Sector Concentration
Single-Stock Risk
Risk & Volatility Characteristics
VYM's defensive positioning provides lower volatility but misses growth opportunities.
Volatility Metrics
Standard Deviation: VYM 14.2% vs VTI 15.8%
Maximum Drawdown (2020): VYM -34% vs VTI -37%
Beta: VYM 0.82 vs VTI 1.00
Downside Capture: VYM 88% vs VTI 100%
Risk-Adjusted Returns
Sharpe Ratio: VYM 0.65 vs VTI 0.72
Sortino Ratio: VYM 0.92 vs VTI 1.05
Calmar Ratio: VYM 0.30 vs VTI 0.32
Alpha: VYM -1.2% vs VTI 0.0%
Market Cycle Performance
Growth Markets: VYM underperforms significantly
Value Markets: VYM outperforms meaningfully
Bear Markets: VYM declines less
Recovery Speed: VTI typically faster
Sector Allocation Comparison
Sector Weighting Differences
VYM's dividend focus creates massive overweights in financials and underweights in technology compared to VTI's market representation.
Financials
Technology
Healthcare
Consumer Staples
Energy
Utilities
Income Analysis
VYM Income Profile
High current yield with modest dividend growth. Value-oriented companies with established dividend payments. Heavy financials and utilities provide stable income. Lower payout ratios than typical high-yield funds. Good inflation protection through dividend growth.
VTI Income Profile
Modest current yield with solid growth potential. Broad diversification includes dividend growers across all sectors. Technology growth fuels long-term dividend increases. More cyclical but higher growth potential. Dividend growth typically exceeds inflation.
Historical Performance & Backtesting
Long-Term Performance Comparison
VTI has significantly outperformed VYM over long periods due to technology/growth leadership, despite VYM's higher yield.
Since 2006 (VYM inception)
Maximum Drawdown (2008)
Sharpe Ratio (10-Year)
Dividend Growth (10-Year)
Top Holdings Comparison
VYM Top Holdings (High Dividend Yield)
Note: Value-heavy, financials dominant, 447 holdings, high yield focus
VTI Top Holdings (Total Market)
Note: Growth-heavy, tech dominant, 3,740 holdings, market representation
Investment Recommendation
💰 Choose VYM If:
- High current income is primary objective (3.05% vs 1.45%)
- You prefer value-oriented, defensive positioning
- Lower volatility and beta appeal to you
- You want exposure to financials and utilities
- Dividend stability is more important than growth
- You're in or near retirement needing income
- You believe value will outperform growth
- You want lower market correlation
📈 Choose VTI If:
- Maximum diversification is priority (3,740 vs 447 holdings)
- Long-term capital growth is primary goal
- You want complete U.S. market exposure
- Technology and growth exposure is important
- You prefer market-neutral, style-agnostic approach
- You're building a core portfolio position
- Ultra-low expense ratio matters (0.03% vs 0.06%)
- You want simplest possible "buy the market" solution
💡 Portfolio Construction Strategy
For maximum income focus: Use VYM as core (70-80%) with VTI satellite (20-30%) for growth/diversification. For balanced approach: 60% VTI + 40% VYM provides ~2.15% blended yield with better growth potential. For core-satellite strategy: Use VTI as core (80%) with VYM satellite (20%) for income boost. Important: VTI's 0.03% expense ratio vs VYM's 0.06% provides slight cost advantage. VYM's 100% large-cap vs VTI's all-cap creates different risk exposures. During growth/tech leadership, VTI significantly outperforms. During value/rate-sensitive markets, VYM outperforms. Consider combining with international: 50% VTI + 30% VXUS + 20% VYM provides global diversification with income tilt. For retirement portfolios: 40% VTI + 30% VYM + 20% BND + 10% VXUS balances growth, income, and stability.