• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Optimized Portfolio

Investing and Personal Finance

  • Beginners Start Here
  • Investing 101
    • Beginners Start Here – 10 Steps To Start Building Wealth
    • What Is the Stock Market? How It Works & How to Invest in It
    • How To Invest in an Index Fund – The Best Index Funds
    • Portfolio Asset Allocation by Age
    • How To Invest Your Emergency Fund
    • Portfolio Diversification – How To Diversify Your Portfolio
    • Dollar Cost Averaging vs. Lump Sum Investing (DCA vs. LSI)
    • How To Invest Your HSA (Health Savings Account)
    • Factor Investing and Factor ETFs – The Ultimate Guide
    • more…
  • Lazy Portfolios
    • All Weather Portfolio
    • Bogleheads 3 Fund Portfolio
    • HEDGEFUNDIE’s Excellent Adventure
    • Warren Buffett Portfolio
    • Golden Butterfly Portfolio
    • Paul Merriman Ultimate Buy and Hold Portfolio
    • Ben Felix Model Portfolio
    • Permanent Portfolio
    • David Swensen Portfolio
    • 60/40 Portfolio
    • more…
  • Brokerage Reviews
    • The 5 Best Stock Brokers
    • The 4 Best Investing Apps
    • M1 Finance Review
    • Brokers with the Lowest Margin Rates
    • M1 Finance vs. Fidelity
    • M1 Finance vs. Vanguard
    • Webull vs. Robinhood
    • Stash vs. Robinhood
    • M1 Borrow Review (How M1’s Margin Loan Works)
    • more…
  • ETFs
    • VOO vs. VTI – Vanguard S&P 500 or Total Stock Market ETF?
    • The 7 Best International ETFs
    • The 8 Best Small Cap ETFs (4 From Vanguard)
    • The 5 Best REIT ETFs
    • The 5 Best EV ETFs – Electric Vehicles ETFs
    • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s
    • The Best Vanguard Dividend Funds – 4 Popular ETFs
    • The 5 Best Tech ETFs
    • The 7 Best Small Cap Value ETFs
    • The 6 Best ETFs for Taxable Accounts
    • The 5 Best Emerging Markets ETFs (1 From Vanguard) for 2022
    • more…
  • Leverage
    • What Is a Leveraged ETF and How Do They Work?
    • How To Beat the Market Using Leverage and Index Investing
    • The 9 Best Leveraged ETFs
    • Hedgefundie’s Excellent Adventure
    • Leveraged All Weather Portfolio
    • Leveraged Permanent Portfolio
    • Leveraged Golden Butterfly Portfolio
    • NTSX – Review and Summary
    • TQQQ – Is It A Good Investment?
    • PSLDX – A Review
    • SWAN – A Review
    • RPAR Risk Parity ETF Review
    • more…
  • Dividends
    • The Best M1 Finance Dividend Pie
    • The 11 Best Dividend ETFs
    • The Best Vanguard Dividend Funds – 4 Popular ETFs
    • VIG vs. VYM – Comparing Vanguard’s 2 Popular Dividend ETF’s
    • 8 Reasons Why I’m Not a Dividend Income Investor
    • QYLD – A Harsh Review
    • more…
  • Bonds
    • The Best Vanguard Bond Funds – 11 Popular ETFs
    • The 11 Best Treasury Bond ETFs
    • Treasury Bonds vs. Corporate Bonds
    • The 3 Best TIPS ETFs
    • The 5 Best High Yield Bond Funds for Income
    • The 3 Best Municipal Bond ETFs
    • How To Buy Bonds Online: The Ultimate Guide
    • The Best Bond Funds Out There – 13 ETFs
    • The 3 Best Corporate Bond ETFs
    • more…

VYM vs. VOO & VTI from Vanguard – Dividends vs. Broad Market

Last Updated: March 23, 2022 5 Comments – 3 min. read

VYM is Vanguard’s dividend-yield-oriented ETF. VOO and VTI are their broad market index funds for the S&P 500 and total U.S. stock market. Let’s compare them.

In a hurry? Here are the highlights:

  • VYM, VOO, and VTI are all very popular U.S. stock funds from Vanguard.
  • VYM tracks the FTSE High Dividend Yield Index. VOO tracks the S&P 500 Index. VTI tracks the CRSP US Total Market Index.
  • As such, VYM is solely U.S. large cap dividend stocks (all Value, no Growth), VOO is U.S. large-cap stocks across both Growth and Value, and VTI is essentially VOO plus small- and mid-cap stocks.
  • VOO and VTI include REITs; VYM does not.
  • VOO and VTI are much more diversified than VYM.
  • VOO and VTI have significantly outperformed VYM going back to VYM’s inception in 2006. In fairness, the Value premium has suffered greatly over that time period. Historical performance of VTI and VOO has been nearly identical.
  • VOO and VTI are more popular and slightly cheaper than VYM.
  • VYM is likely unsuitable as a core holding in a well-diversified investment portfolio.

Contents

  • VYM vs. VOO and VTI – Methodology and Composition
  • VYM vs. VOO and VTI – Historical Performance
  • VYM vs. VOO and VTI – AUM and Fees
  • Conclusion

VYM vs. VOO and VTI – Methodology and Composition

We can compare VYM to both VOO and VTI at the same time, as both VOO and VTI capture “the market” in the U.S. and perform nearly identically; VOO is the S&P 500 and VTI is the total U.S. stock market. I delved into comparing VOO and VTI here.

VYM, established in 2006, is a narrower segment of the market. It is the Vanguard High Dividend Yield ETF. It has about 400 holdings. As the name suggests, the fund holds large-cap U.S. stocks with a high dividend yield. Specifically, the fund seeks to track the FTSE High Dividend Yield Index.

The index is market cap weighted, and attempts to forecast dividend yield. REITs are excluded. Stocks forecasted to have no dividend yield or that haven’t paid a dividend in the past 12 months are also excluded. As such, VYM is entirely exposed to large cap value; it has no exposure to large cap growth stocks, as they tend to not pay a dividend.

Sector weightings are naturally very different for VYM than for VOO or VTI. Thus, VYM alone would not be sufficient as a core holding for a diversified investment portfolio, and should probably only be used to tilt, or overweight, high dividend stocks in one’s portfolio. This may be attractive for dividend investors; I’m not a dividend investor, but I did design a dividend-focused portfolio that incorporates VYM.

VOO is the Vanguard S&P 500 ETF. Established in 2010, it is one of the most popular ETFs out there. The fund seeks to track the S&P 500 Index, holding over 500 U.S. large-cap stocks, weighted by market capitalization. This index is considered a barometer for the U.S. stock market. VOO is roughly half large cap value and half large cap growth. As such, it is more diversified than VYM.

VTI is the Vanguard Total Stock Market ETF. It was established in 2001. VTI provides similar broad exposure to the U.S. stock market, but also includes small- and mid-cap stocks. Specifically, VTI is about 82% large cap stocks, 12% mid cap stocks, and 6% small cap stocks.

The fund seeks to track the CRSP US Total Market Index. This ETF has over 3,500 holdings. Consequently, VTI can be considered more diversified than VOO.

All three of these funds only hold stocks in the United States. Both VOO and VTI include REITs, while VYM does not.

VYM vs. VOO and VTI – Historical Performance

Going back to 2006 when VYM was incepted, VOO and VTI have beaten it handily:

vym vs voo and vti
Source: PortfolioVisualizer.com

In fairness, we should expect this result, as VYM inherently has much more exposure to the Value factor, and the Value premium has suffered over the past decade.

VYM vs. VOO and VTI – AUM and Fees

Though all three of these funds are highly liquid and very popular, Vanguard’s VOO and VTI are much more popular than VYM with over $550 billion and $900 billion in assets, respectively, compared to about $33 billion for VYM.

VYM has an expense ratio of 0.06%, while both VOO and VTI are cheaper with an expense ratio of 0.03%.

Conclusion

Investors seeking broad, diversified exposure to the U.S. stock market should use VOO or VTI as a core holding. VYM only looks at large-cap, high-dividend-yield stocks in the U.S. and is thus likely better suited as a dividend tilt for those looking to use dividend yield as income or those who want a suboptimal Value factor tilt.

VOO and VTI have outperformed VYM going back to VYM’s inception in 2006, as VYM has no exposure to Growth, which has beaten Value over that time period, highlighting the importance of diversification across equity styles.

VOO and VTI are also more popular and slightly cheaper than VYM.

Conveniently, all these funds should be available at any major broker, including M1 Finance, which is the one I’m usually suggesting around here.


Disclosure: I am long VOO.

Disclaimer:  While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.

m1 finance get started

Related Posts

  • The 6 Best Large Cap Growth ETFs (2 From Vanguard) for 2022
  • The 13 Best iShares ETFs for Index Investors
  • How To Invest Your HSA (Health Savings Account)
  • 9 Best Clean Energy ETFs To Go Green in Your Portfolio (2022)
  • The 6 Best AI ETFs To Bet on Artificial Intelligence in 2022

About John Williamson

Analytical and entrepreneurial-minded data nerd, usability enthusiast, Boglehead, and Oxford comma advocate. I lead the Paid Search marketing efforts at Gild Group. I'm not a big fan of social media, but you can find me on LinkedIn and Reddit.

Reader Interactions

Comments

  1. Jenny says

    July 3, 2021 at 7:08 am

    I have $100k saving. I like to invest in dividend ETFs to earn some monthly income in stead of investing it in CD. I am looking at these ETFS VYM, SCHD, VOO, QQQ. Some of them are very high so I have this question.
    Should I buy SCHD @$76/share and earn $0.67 / share in dividend?
    or
    Should I buy VOO @$398/share and earn $1.33/share in dividend?
    I think the cheaper ETF prices is the better dividend income.
    However, I am sure if my thought is right.
    Can anyone please clear my thought on this?
    Thanks very much.
    Have a nice day!

    Reply
    • John Williamson says

      July 4, 2021 at 3:53 pm

      Hi Jenny. These would be very different investments. Don’t focus on the share price. Also remember dividends are not free money, so unless you’re specifically using them as income, there’s no reason to chase the yield.

      Reply
      • Julie says

        August 5, 2021 at 11:39 pm

        What does mean :“ dividends are not free money”?

        Reply
        • John Williamson says

          August 6, 2021 at 10:15 am

          Share price compensates for the dividend payment. See this post.

          Reply
    • Julie says

      August 5, 2021 at 11:44 pm

      Hi Jenny , I’m on. the same stage, too. What did you do?

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Sign up to receive email updates when a new post is published.

Don't worry, I hate spam too. No ads.

  • Facebook
  • Instagram
  • Twitter
  • YouTube
  • Reddit

Most Popular

Ray Dalio All Weather Portfolio Review, ETF’s, & Leverage

HEDGEFUNDIE’s Excellent Adventure (UPRO/TMF) – A Summary

Golden Butterfly Portfolio Review and M1 Finance ETF Pie

David Swensen Portfolio (Yale Model) Review and ETFs To Use

Harry Browne Permanent Portfolio Review, ETFs, & Leverage (2022)

Corporate Bonds vs. Government Bonds (Treasuries) – The Showdown

VIG vs. VYM – Vanguard’s 2 Popular Dividend ETFs (Review)

Warren Buffett ETF Portfolio (90/10) Review and ETFs (2022)

The 60/40 Portfolio Review and ETF Pie for M1 Finance

Bogleheads 3 Fund Portfolio Review and Vanguard ETFs To Use

m1 sidebar

Paul Merriman Ultimate Buy and Hold Portfolio Review, M1 Pie (2022)

Lowest Margin Rates Brokers (2022 Comparison)

M1 Finance vs. Vanguard Brokerage Comparison [2022 Review]

M1 Finance vs. Fidelity Brokerage Comparison [2022 Review]

The Best M1 Finance Dividend Pie for FIRE & Income Investors

Portfolio Asset Allocation by Age – Beginners To Retirees

The 5 Best Stock Brokers Online for Investing (2022 Review)

The 4 Best Investing Apps for Beginners (2022 Review)

The 7 Best Small Cap ETFs (3 From Vanguard) for 2022

The 6 Best REIT ETFs To Invest in Real Estate for 2022

The 6 Best Tech ETFs To Buy Tech Stocks in 2022

9 Best Clean Energy ETFs To Go Green in Your Portfolio (2022)

The 12 Best Small Cap Value ETFs (3 From Vanguard) for 2022

Why, How, & Where To Invest Your Emergency Fund To Beat Inflation

VOO vs. VTI – Vanguard’s S&P 500 and Total Stock Market ETFs

9 Best International ETFs To Buy (6 From Vanguard) in 2022

Ben Felix Model Portfolio (Rational Reminder, PWL) ETFs & Review

Factor Investing and Factor ETFs – The Ultimate Guide

Gone Fishin’ Portfolio Review (Alexander Green) & ETFs (2022)

TQQQ – Is It A Good Investment for a Long Term Hold Strategy?

Recent Posts

Tail Risk – What It Is and How To Hedge Against It

I Bonds (U.S. Government Savings Bonds) – The Ultimate Guide

JEPI ETF Review – JPMorgan Equity Premium Income ETF

Sharpe Ratio vs. Sortino vs. Calmar – Risk Adjusted Return

Investing Risk Explained (My Take on Portfolio Risk & Volatility)

HNDL ETF Review – Strategy Shares NASDAQ 7HANDL™ Index ETF

NUSI ETF Review – An Income-Focused Option Collar ETF

3 Best SPAC ETFs To Invest in SPACs in 2022 – But Should You?

VOO vs. VOOV vs. VOOG – Vanguard S&P 500, Value, or Growth?

VXUS vs. VEU – Which Vanguard Total International ETF?

VT vs. VTI – Global Stock Market vs. Total U.S. Stock Market

RPAR Risk Parity ETF Review – An All Weather Portfolio ETF?

PSLDX – A Review of the PIMCO StocksPLUS® Long Duration Fund

The 7 Best Value ETFs To Capture Value Stocks in 2022

SWAN – A Review of the Amplify BlackSwan ETF for Downturns

View All...

Footer

  • Facebook
  • Instagram
  • Twitter
  • YouTube
  • Reddit

Amazon Affiliate Disclosure

OptimizedPortfolio.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

Email Newsletter

Sign up to receive email updates when a new post is published.

Don't worry, I hate spam too. No ads.

About - My Toolbox - Privacy - Terms - Contact


Copyright © 2022 OptimizedPortfolio.com

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Ok, Got ItReject Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT