VMBS vs VYM
VMBS vs VYM
Vanguard Mortgage-Backed Securities ETF vs Vanguard High Dividend Yield ETF
Quick Verdict
VMBS has a lower expense ratio. VYM delivered stronger 1-year returns. VMBS offers more diversification with 4688 holdings.
Side-by-Side Comparison
| Metric | VMBS | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.04% | |
| AUM | $15.6B | $79.0B | |
| Dividend Yield | 4.15% | 2.86% | |
| Holdings | 5,043 | 568 | |
| YTD Return | +0.01% | +13.24% | |
| 1Y Return | +4.32% | +23.76% | |
| 3Y Return (annualized) | +4.53% | +16.97% | |
| 5Y Return (annualized) | +0.22% | +12.26% | |
| Volatility (annualized) | 4.2% | 14.6% | |
| Max Drawdown | -18.4% | -58.8% | |
| Fund Family | Vanguard (US) | Vanguard (US) | |
| Category | Fixed Income | Equity | |
| Inception | Nov 19, 2009 | Nov 10, 2006 |
VMBS vs VYM Performance
Vanguard Mortgage-Backed Securities ETF (VMBS) is a ETF from Vanguard (US) and Vanguard High Dividend Yield ETF (VYM) is a ETF from Vanguard (US). Over the past year VMBS returned +4.32% while VYM returned +23.76%. Year to date, VMBS is up 0.01% versus a gain of 13.24% for VYM.
Over three years, VMBS compounded at +4.53% per year against +16.97% for VYM; over five years the annualized figures are +0.22% and +12.26% respectively. Across the full 17-year window we track, VYM has the edge at +6.96% annualized vs +0.49%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VYM has been the more volatile fund, with annualized monthly volatility of 14.6% compared with 4.2% for VMBS. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -18.4% for VMBS and -58.8% for VYM. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.22. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VMBS charges 0.03% per year while VYM charges 0.04%. On a $10,000 position that is $3 vs $4 annually, a gap of $1 per year that compounds over a long holding period. On income, VMBS currently yields 4.15% against 2.86% for VYM.
Holdings Overlap
VMBS and VYM share 0 holdings out of 5246 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VMBS or VYM?
VMBS has an expense ratio of 0.03% while VYM charges 0.04%. VMBS is the cheaper option. On a $10,000 investment, that is $1 per year of difference.
Which performed better, VMBS or VYM?
Over the past year VMBS returned +4.32% vs +23.76% for VYM, so VYM leads on 1-year performance. Over the longest common window we track (17 years), VMBS annualized +0.49% vs +6.96% for VYM. Past performance does not guarantee future results.
Which is riskier, VMBS or VYM?
VYM has been the more volatile fund at 14.6% annualized versus 4.2% for VMBS. Worst drawdown: VMBS -18.4% vs VYM -58.8%.
Should I hold both VMBS and VYM?
VMBS and VYM have a monthly-return correlation of 0.22, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VMBS and VYM?
VMBS and VYM share 0 common holdings with a 0.0% weight overlap. Combined, they hold 5246 unique securities.
Which pays a higher dividend, VMBS or VYM?
VMBS yields 4.15% while VYM yields 2.86%, so VMBS currently pays the higher dividend yield.
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