HPS vs VYM
John Hancock Preferred Income Fund III 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 | HPS | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 1.81% | 0.04% | |
| AUM | $474M | $79.0B | |
| Dividend Yield | 9.66% | 2.86% | |
| Holdings | 175 | 568 | |
| YTD Return | +4.20% | +16.16% | |
| 1Y Return | +7.07% | +26.05% | |
| 3Y Return (annualized) | +10.44% | +18.43% | |
| 5Y Return (annualized) | +2.64% | +12.21% | |
| Volatility (annualized) | 19.4% | 14.6% | |
| Max Drawdown | -77.7% | -58.8% | |
| Fund Family | John Hancock Investment Management | Vanguard (US) | |
| Category | Allocation/Balanced | Equity | |
| Inception | Jun 18, 2003 | Nov 10, 2006 |
HPS vs VYM Performance
John Hancock Preferred Income Fund III (HPS) is a ETF from John Hancock Investment Management and Vanguard High Dividend Yield ETF (VYM) is a ETF from Vanguard (US). Over the past year HPS returned +7.07% while VYM returned +26.05%. Year to date, HPS is up 4.20% versus a gain of 16.16% for VYM.
Over three years, HPS compounded at +10.44% per year against +18.43% for VYM; over five years the annualized figures are +2.64% and +12.21% respectively. Across the full 20-year window we track, VYM has the edge at +7.09% annualized vs -0.40%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
HPS has been the more volatile fund, with annualized monthly volatility of 19.4% 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 -77.7% for HPS 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 0.50. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
HPS charges 1.81% per year while VYM charges 0.04%. On a $10,000 position that is $181 vs $4 annually, a gap of $177 per year that compounds over a long holding period. On income, HPS currently yields 9.66% against 2.86% for VYM.
Holdings Overlap
HPS and VYM share 37 holdings out of 616 unique holdings combined, representing a 7.6% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, HPS or VYM?
HPS has an expense ratio of 1.81% while VYM charges 0.04%. VYM is the cheaper option. On a $10,000 investment, that is $177 per year of difference.
Which performed better, HPS or VYM?
Over the past year HPS returned +7.07% vs +26.05% for VYM, so VYM leads on 1-year performance. Over the longest common window we track (20 years), HPS annualized -0.40% vs +7.09% for VYM. Past performance does not guarantee future results.
Which is riskier, HPS or VYM?
HPS has been the more volatile fund at 19.4% annualized versus 14.6% for VYM. Worst drawdown: HPS -77.7% vs VYM -58.8%.
Should I hold both HPS and VYM?
HPS and VYM have a monthly-return correlation of 0.50, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between HPS and VYM?
HPS and VYM share 37 common holdings with a 7.6% weight overlap. Combined, they hold 616 unique securities.
Which pays a higher dividend, HPS or VYM?
HPS yields 9.66% while VYM yields 2.86%, so HPS currently pays the higher dividend yield.
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