FAAR vs VYM
FAAR vs VYM
First Trust Alternative Absolute Return Strategy ETF vs Vanguard High Dividend Yield ETF
Quick Verdict
VYM has a lower expense ratio. VYM delivered stronger 1-year returns. VYM offers more diversification with 558 holdings.
Side-by-Side Comparison
| Metric | FAAR | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 0.97% | 0.04% | |
| AUM | $191M | $79.0B | |
| Dividend Yield | 9.19% | 2.86% | |
| Holdings | 6 | 568 | |
| YTD Return | +13.94% | +15.80% | |
| 1Y Return | +19.26% | +26.12% | |
| 3Y Return (annualized) | +8.78% | +18.25% | |
| 5Y Return (annualized) | +7.33% | +12.51% | |
| Volatility (annualized) | 9.2% | 14.6% | |
| Max Drawdown | -18.8% | -58.8% | |
| Fund Family | First Trust Portfolios (US) | Vanguard (US) | |
| Category | Commodity | Equity | |
| Inception | May 18, 2016 | Nov 10, 2006 |
FAAR vs VYM Performance
First Trust Alternative Absolute Return Strategy ETF (FAAR) is a ETF from First Trust Portfolios (US) and Vanguard High Dividend Yield ETF (VYM) is a ETF from Vanguard (US). Over the past year FAAR returned +19.26% while VYM returned +26.12%. Year to date, FAAR is up 13.94% versus a gain of 15.80% for VYM.
Over three years, FAAR compounded at +8.78% per year against +18.25% for VYM; over five years the annualized figures are +7.33% and +12.51% respectively. Across the full 10-year window we track, VYM has the edge at +7.07% annualized vs +3.32%. 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 9.2% for FAAR. 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 -18.8% for FAAR 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 0.20. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FAAR charges 0.97% per year while VYM charges 0.04%. On a $10,000 position that is $97 vs $4 annually, a gap of $93 per year that compounds over a long holding period. On income, FAAR currently yields 9.19% against 2.86% for VYM.
Holdings Overlap
FAAR and VYM share 0 holdings out of 559 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, FAAR or VYM?
FAAR has an expense ratio of 0.97% while VYM charges 0.04%. VYM is the cheaper option. On a $10,000 investment, that is $93 per year of difference.
Which performed better, FAAR or VYM?
Over the past year FAAR returned +19.26% vs +26.12% for VYM, so VYM leads on 1-year performance. Over the longest common window we track (10 years), FAAR annualized +3.32% vs +7.07% for VYM. Past performance does not guarantee future results.
Which is riskier, FAAR or VYM?
VYM has been the more volatile fund at 14.6% annualized versus 9.2% for FAAR. Worst drawdown: FAAR -18.8% vs VYM -58.8%.
Should I hold both FAAR and VYM?
FAAR and VYM have a monthly-return correlation of 0.20, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FAAR and VYM?
FAAR and VYM share 0 common holdings with a 0.0% weight overlap. Combined, they hold 559 unique securities.
Which pays a higher dividend, FAAR or VYM?
FAAR yields 9.19% while VYM yields 2.86%, so FAAR currently pays the higher dividend yield.
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