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

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.

// TIMESTAMPS:

00:00 - Intro
00:11 - Methodology and Composition
02:21 - Performance
02:35 - AUM and Fees
03:01 - Conclusion

// SUMMARY:

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

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

Read the blog post here: https://www.optimizedportfolio.com/vy...

#investing #stocks #stockmarket #dividends #dividendinvesting

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