HFRO vs VYM
Highland Opportunities and Income Fund vs Vanguard High Dividend Yield ETF
Quick Verdict
VYM has a lower expense ratio. HFRO delivered stronger 1-year returns. VYM offers more diversification with 558 holdings.
Side-by-Side Comparison
| Metric | HFRO | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 1.18% | 0.04% | |
| AUM | $650M | $79.0B | |
| Dividend Yield | 3.91% | 2.86% | |
| Holdings | 64 | 568 | |
| YTD Return | +26.15% | +16.16% | |
| 1Y Return | +30.54% | +26.05% | |
| 3Y Return (annualized) | +3.62% | +18.43% | |
| 5Y Return (annualized) | +0.75% | +12.21% | |
| Volatility (annualized) | 25.0% | 14.6% | |
| Max Drawdown | -60.5% | -58.8% | |
| Fund Family | NexPoint | Vanguard (US) | |
| Category | Fixed Income | Equity | |
| Inception | Jan 13, 2000 | Nov 10, 2006 |
HFRO vs VYM Performance
Highland Opportunities and Income Fund (HFRO) is a ETF from NexPoint and Vanguard High Dividend Yield ETF (VYM) is a ETF from Vanguard (US). Over the past year HFRO returned +30.54% while VYM returned +26.05%. Year to date, HFRO is up 26.15% versus a gain of 16.16% for VYM.
Over three years, HFRO compounded at +3.62% per year against +18.43% for VYM; over five years the annualized figures are +0.75% and +12.21% respectively. Across the full 9-year window we track, VYM has the edge at +7.09% annualized vs -3.28%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
HFRO has been the more volatile fund, with annualized monthly volatility of 25.0% compared with 14.6% for VYM. 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 -60.5% for HFRO 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 0.59. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
HFRO charges 1.18% per year while VYM charges 0.04%. On a $10,000 position that is $118 vs $4 annually, a gap of $114 per year that compounds over a long holding period. On income, HFRO currently yields 3.91% against 2.86% for VYM.
Holdings Overlap
HFRO and VYM share 1 holdings out of 571 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Top Shared Holdings
| Stock | Weight in HFRO | Weight in VYM | Difference |
|---|---|---|---|
| ABMD | 0.45% | 0.01% | 0.44% |
Frequently Asked Questions
Which is cheaper, HFRO or VYM?
HFRO has an expense ratio of 1.18% while VYM charges 0.04%. VYM is the cheaper option. On a $10,000 investment, that is $114 per year of difference.
Which performed better, HFRO or VYM?
Over the past year HFRO returned +30.54% vs +26.05% for VYM, so HFRO leads on 1-year performance. Over the longest common window we track (9 years), HFRO annualized -3.28% vs +7.09% for VYM. Past performance does not guarantee future results.
Which is riskier, HFRO or VYM?
HFRO has been the more volatile fund at 25.0% annualized versus 14.6% for VYM. Worst drawdown: HFRO -60.5% vs VYM -58.8%.
Should I hold both HFRO and VYM?
HFRO and VYM have a monthly-return correlation of 0.59, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between HFRO and VYM?
HFRO and VYM share 1 common holdings with a 0.0% weight overlap. Combined, they hold 571 unique securities.
Which pays a higher dividend, HFRO or VYM?
HFRO yields 3.91% while VYM yields 2.86%, so HFRO currently pays the higher dividend yield.
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