vym vs voo

VYM vs VOO – Better Vanguard ETF for Your Portfolio? (2022)

In this guide, we compare two of the most popular Vanguard ETFs – VYM vs VOO.

This guide will help investors decide which investment is better for their personal circumstances.

Regardless, both of these investment funds hold some very Undervalued Stocks that have rewarded investors in the long term.

VYM vs VOO – Full Comparison

Below you will find an in-depth comparison between VYM vs VOO. Both are popular Vanguard Index Funds.

VYM vs VOO - Full Comparison

VYM Description

VYM is Vanguard’s High Dividend Yield ETF. Their website states the following about VYM:

“Seeks to track the performance of the FTSE® High Dividend Yield Index, which measures the investment return of common stocks of companies characterized by high dividend yields.”

“Provides a convenient way to track the performance of stocks that are forecasted to have above-average dividend yields.”  

vym stock price

VOO Description

VOO is a Vanguard ETF that tracks the S&P 500 index, which represents the 500 largest publicly-traded US companies.

According to Vanguard’s website, the goal of this fund is to closely track the S&P 500 index’s return, which is considered a gauge of overall U.S. stock returns.

As a result, it’s a diverse fund, with stocks from across all sectors.  

voo stock price

The video below provides a brief overview of these Vanguard investment funds.  

 

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VYM vs VOO – Dividend Reinvestment

Both VYM and VOO allow investors to reinvest their dividend income.

Because VYM has a heavier focus on value firms, they have a higher dividend yield.

This is because value companies provide consistent cash flow and prefer to pay their shareholders quarterly dividends.

This is different than VOO, which has a larger focus on growth companies. Growth companies put their cash towards research and development instead of dividend payouts.

VYM and VOO both allow automatic investments and withdrawals. That is, if you’d like to automatically invest a certain amount each week or month, you can do so with either product.

Currently, VYM has a greater dividend yield as of this writing.

VYM vs VOO - Minimum Investment

VYM vs VOO – Minimum Investment

Because both VYM and VOO are ETF products, the minimum investment is one share.

For example, you cannot buy partial shares in either fund like you can for index funds.

Thus, whichever fund is currently trading at a lower share price will have a lower minimum investment.

This will fluctuate across time, so neither product offers any distinct advantage over the other in this category.

It’s extremely common for popular mutual funds to require a minimum investment, ranging from $1,000 to $50,000 for admiral shares at Vanguard.  

Liquidity and Day Trading

Liquidity and Day Trading

Both VYM and VOO have access to real-time pricing. This means during market hours, you will receive a price quote per share.

Real-time pricing helps increase liquidity. High liquidity is a way to increase the price because it expands the pool of available investors.

Lastly, strong liquidity is imperative for properly implementing a day or swing trading strategy.

We do not recommend day trading as an investment strategy, but it has made some people fabulously rich.

There’s a reason the best investors are dead. Long-term investors typically hold index funds diversified across various sectors.

Best Vanguard Index Funds
Best Fidelity Index Funds  

vym vs voo Investment Holdings

Investment Holdings

So, you may be asking, “What are the underlying holdings for VYM and VOO?”

VYM holds large-cap companies that pay above-average dividend yields, while VOO holds S&P 500 companies.

Below are the major holdings for VYM:  

VYM Holdings

VYM Holdings

The main investment holdings within the VOO fund include:  

VOO Holdings

VOO Holdings

You notice that VOO is very heavy in the growth sectors of electric vehicles, space exploration, 5G, robotics, carbon capture, and more. VYM on the other hand is heavy in value firms.

VYM Pros

Some pros to investing in the VYM fund include:

  • High dividend yield of 2.66%
  • Low expense ratio of 0.06%
  • Real-time pricing
  • Vanguard product

VYM Cons

Downsides to investing in VYM include the following:

  • Lower share price appreciation compared to VOO
  • Can’t purchase partial shares on Vanguard
  • Lack of exposure to growth stocks

VOO Pros

The VOO ETF is one of Vanguard’s fastest-growing funds. Here are a few of its benefits:

  • Good historical performance over the past several years
  • Low, 0.03% expense ratio
  • Exposure to innovative tech companies
  • Vanguard product

VOO Cons

Vanguard’s funds are not perfect. Here are a couple of reasons you might not want to invest in VOO:

  • Lower dividend yield compared to VYM
  • Cannot purchase partial shares on Vanguard
  • No exposure to small-cap companies

Other Fund Comparisons

Other Fund Comparisons

I have written many other investment fund comparison reviews. I highly recommend reading any of the following for more information.

Vanguard, Fidelity, and Schwab have thousands of fund choices, and you should subscribe to their newsletters! They have easy-to-understand content for investors at any level.

VYM vs VOO – Final Thoughts

Both VYM and VOO are investing in large-cap companies with good dividend yields within the United States.

The biggest differences are the investment holdings, dividend yields, and historical performances.

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VYM vs VOO FAQ

What’s the Difference Between VYM vs VOO?

VYM is Vanguard’s High Dividend Yield ETF and VOO is Vanguard’s S&P 500 ETF.

Is VYM or VOO Better?

Neither fund is necessarily better, as preference will depend on an investor’s circumstances. VYM is more of a value play while VOO is focused on growth.

What are the Holdings of VYM and VOO?

VYM holds large-cap companies in the US with larger dividend yields. VOO holds companies within the S&P 500 index.

How do I Buy VYM or VOO?

You can buy both VYM or VOO on any brokerage website such as Vanguard, Robinhood, Fidelity, M1 Finance, and others.