The Vanguard ETF Up About 28% in the Past Year That Almost Nobody Outside of Income Investors Knows

By John Seetoo Published Apr 1, 10:58AM EDT

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Vanguard International High Dividend Yield Index Fund ETF Shares (VYMI) returned 27.45% over the past year with a 3.28% yield, significantly outperforming broader international ETF Vanguard Total International Stock Index Fund ETF Shares (VXUS) which returned 21.84%, while also maintaining a lower 0.90 Beta and minimal 0.07% expense ratio.
VYMI’s 40% weighting in financials and international diversification across Japan, UK, Canada, Switzerland and Australia gives it a different risk-return profile than growth-focused ETFs like the S&P 500, which are concentrated in AI stocks.
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The Vanguard ETF Up About 28% in the Past Year That Almost Nobody Outside of Income Investors Knows — © RORONOR / Shutterstock.com

Investors tracking growth oriented ETFs often cite the Invesco QQQ Trust (NASDAQ: QQQ), which tracks the NASDAQ-100. It returned 17.37% in the past year. Growth investors seeking international exposure also track Vanguard Total International Stock Index Fund ETF Shares (NASDAQ: VXUS) and saw a 21.84% return over the past 12 months. The benchmark S&P 500, by contrast, returned 17-17.9%. However, Vanguard has a high-yield international ETF that ate both of those ETF’s lunches in the same timespan with a one-year return of 27.45%: the Vanguard International High Dividend Yield Index Fund ETF Shares (NASDAQ: VYMI)

Vanguard International High Dividend Yield Index Fund ETF Shares

A central blue and green globe, representing Earth, is surrounded by white currency symbols including the dollar, euro, yen, pound, ruble, rupee, and won. White numerical data points are scattered around the globe. A transparent, upward-trending stock market candlestick chart with green and red bars overlays the scene, indicating market growth. The background is a blurry composition of various international banknotes, including visible US dollar bills and Chinese Yuan.

Vanguard’s VYMI has been stealthily making its international equities cousin, VXUS, eat its dust in annual gains as well as in dividend yield for the past 10 years.

VYMI focuses on high dividend international stocks, and includes such well-known names as Novartis AG, Shell plc, HSBC Holdings plc, and Toyota. At the time of this writing, it is yielding 3.28%, has $20.1 billion in net assets, averages 1.58 million shares in daily volume, a low 0.07% expense ratio, a surprisingly low 13.5 P/E ratio, holds between 1,530 and 1,623 stocks, and has a reasonable 0.9 Beta risk.

Geographically, VYMI’s holdings hail from: Japan (about 14%), UK (nearly 11%), Canada (about 8%), Switzerland (close to 7%), and Australia (also about 7%). Sectorwise, it has a heavy, 40% weighting towards financials, with industrials at 9%, energy at 8.3%, basic materials at 7.51%, consumer cyclical at 7.09% and consumer defensive at 7.08%. This is in stark contrast to ETFs like the Vanguard S&P 500 ETF (NYSE: VOO), which is driven heavily for the A.I. focused Magnificent 7 stocks. In fact, Vanguard International Dividend Appreciation ETF (NASDAQ: VIGI), Vanguard’s international dividend growth ETF, carries some of the same dividend stocks as VYMI, but its tilt towards would-be dividend aristocrat qualified stocks changes its portfolio composition away from those delivering the combination of gains and yield held by VYMI.

Perhaps it’s the diversity in its industrial sector exposure, but VYMI has consistently outperformed VXUS, despite the latter’s portfolio being loaded with high-flyers like Taiwan Semiconductor, Samsung, and TenCent. When comparing 10-year trailing returns, VYMI attained an 11.77% gain, while VXUS came in at 10.61%, and with a higher 16.19 P/E ratio and even delivering a respectable (for a growth ETF), albeit lower 2.86% yield.

Head-To-Head International Face-Off: VYMI vs. VXUS

VYMI and VXUS in a face off, head to head comparison.

VYMI:

Net Assets	$20.1 billion	Avg. Daily Volume	1.58 million shares
Yield	3.28%	YTD Return	2.39%
52 Wk. Range	$65.08-$101.71	1-Year return	27.45%
Beta	0.90	3-Year return	23.12%
Expense Ratio	0.07%	5-Year Return	14.92%
P/E Ratio	13.56	10-Year Return	11.77%

Top 5 Largest Holdings:

Roche Holding AG (1.77%)
Novartis AG (1.71%)
HSBC Holdings plc (1.70%)
Nestle SA (1.47%)
Toyota Motor (1.36%)

VXUS:

Net Assets	$636.67 billion	Avg. Daily Volume	9.91 million shares
Yield	2.86%	YTD Return	-0.89%
52 Wk. Range	$54.98-$84.28	1-Year return	21.84%
Beta	0.99	3-Year return	19.87%
Expense Ratio	0.05	5-Year Return	9.85%
P/E Ratio	16.19	10-Year Return	10.61%

Top 5 Largest Holdings:

Taiwan Semiconductor (3.42%)
Samsung Electronics (1.59%)
ASML Holding NV (1.29%)
TenCent Holdings (0.92%)
SK hynix Inc (0.90%)

An Obscure 2-For-1 International Play?

With $636 billion in assets and average 9.9 million share daily volume, VXUS is unquestionably better known in the market and has a much higher profile than VYMI. It also boasts over 8,700 different stocks in its portfolio, and is a popular international equities ETF for investors looking for geographic market diversity risk mitigation with a non-US investment.

However, VYMI offers comparable international sector diversification along with a track record of higher yield and higher returns, year after year. Additionally, VYMI’s 0.90 Beta offers lower volatility than VXUS, with its 0.99 Beta. Yes, VYMI may be more obscure and under the radar, but Vanguard ETFs have earned their reputation for delivering the goods to satisfied shareholders for decades. VYMI appears to be yet another one., and hands its shareholders a nice 2-for-1 capital gains and yield combination.

About the Author John Seetoo →

After 15 years on Wall Street with 7 of them as Director of Corporate and Municipal Bond Trading for a NYSE member firm, I started my own project and corporate finance consultancy. Much of the work involves writing business plans, presentations, white papers and marketing materials for companies seeking budgetary allocations for spinoffs and new initiatives or for raising capital for expansion or startup companies and entrepreneurs. On financial topics, I have been published under my own byline at The Motley Fool, 247wallst.com, DealFlow Events’ Healthcare Services Investment Newsletter and The Microcap Newsletter, among others. Additionally, I have done freelance ghostwriting writing and editing for several financial websites, such as Seeking Alpha and Shmoop Financial. I have also written and been published on a variety of other topics from music, audiophile sound and film to musical instrument history, martial arts, and current events. Publications include Copper Magazine, Fidelity (Germany), Blasting News, Inside Kung-Fu, and other periodicals.