Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Vanguard High Dividend Yield Index Fund ETF Shares (VYM) is a passively managed exchange traded fund launched on November 10, 2006.
The fund is sponsored by Vanguard. It has amassed assets over $74.93 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.04%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.29%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector -- about 20% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Broadcom Inc (AVGO) accounts for about 6.94% of total assets, followed by Jpmorgan Chase & Co (JPM) and Exxon Mobil Corp (XOM).
Performance and Risk
VYM seeks to match the performance of the FTSE High Dividend Yield Index before fees and expenses. The FTSE High Dividend Yield Index which is consists of common stocks of companies that pay dividends that generally are higher than average.
The ETF return is roughly 7.34% so far this year and is up roughly 29.48% in the last one year (as of 04/14/2026). In the past 52-week period, it has traded between $118.70 and $156.50.
The ETF has a beta of 0.74 and standard deviation of 12.49% for the trailing three-year period, making it a medium risk choice in the space. With about 570 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard High Dividend Yield Index Fund ETF Shares holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VYM is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value Index Fund ETF Shares (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $85.68 billion in assets, Vanguard Value Index Fund ETF Shares has $168.62 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.03%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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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Vanguard High Dividend Yield Index Fund ETF Shares (VYM): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).