LQD vs VYM
iShares iBoxx $ Investment Grade Corporate Bond ETF vs Vanguard High Dividend Yield ETF
Quick Verdict
VYM has a lower expense ratio. VYM delivered stronger 1-year returns. LQD offers more diversification with 2668 holdings.
Side-by-Side Comparison
| Metric | LQD | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 0.14% | 0.04% | |
| AUM | $33.8B | $79.0B | |
| Dividend Yield | 4.55% | 2.86% | |
| Holdings | 3,134 | 568 | |
| YTD Return | -1.60% | +16.16% | |
| 1Y Return | +0.76% | +26.05% | |
| 3Y Return (annualized) | +4.63% | +18.43% | |
| 5Y Return (annualized) | -0.89% | +12.21% | |
| Volatility (annualized) | 7.9% | 14.6% | |
| Max Drawdown | -25.0% | -58.8% | |
| Fund Family | iShares by BlackRock (US) | Vanguard (US) | |
| Category | Fixed Income | Equity | |
| Inception | Jul 22, 2002 | Nov 10, 2006 |
LQD vs VYM Performance
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) is a ETF from iShares by BlackRock (US) and Vanguard High Dividend Yield ETF (VYM) is a ETF from Vanguard (US). Over the past year LQD returned +0.76% while VYM returned +26.05%. Year to date, LQD is down 1.60% versus a gain of 16.16% for VYM.
Over three years, LQD compounded at +4.63% per year against +18.43% for VYM; over five years the annualized figures are -0.89% and +12.21% respectively. Across the full 20-year window we track, VYM has the edge at +7.09% annualized vs +4.27%. 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 7.9% for LQD. 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 -25.0% for LQD 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 0.39. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
LQD charges 0.14% per year while VYM charges 0.04%. On a $10,000 position that is $14 vs $4 annually, a gap of $10 per year that compounds over a long holding period. On income, LQD currently yields 4.55% against 2.86% for VYM.
Holdings Overlap
LQD and VYM share 1 holdings out of 3225 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 LQD | Weight in VYM | Difference |
|---|---|---|---|
| RPRX | 0.01% | 0.08% | 0.07% |
Frequently Asked Questions
Which is cheaper, LQD or VYM?
LQD has an expense ratio of 0.14% while VYM charges 0.04%. VYM is the cheaper option. On a $10,000 investment, that is $10 per year of difference.
Which performed better, LQD or VYM?
Over the past year LQD returned +0.76% vs +26.05% for VYM, so VYM leads on 1-year performance. Over the longest common window we track (20 years), LQD annualized +4.27% vs +7.09% for VYM. Past performance does not guarantee future results.
Which is riskier, LQD or VYM?
VYM has been the more volatile fund at 14.6% annualized versus 7.9% for LQD. Worst drawdown: LQD -25.0% vs VYM -58.8%.
Should I hold both LQD and VYM?
LQD and VYM have a monthly-return correlation of 0.39, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between LQD and VYM?
LQD and VYM share 1 common holdings with a 0.0% weight overlap. Combined, they hold 3225 unique securities.
Which pays a higher dividend, LQD or VYM?
LQD yields 4.55% while VYM yields 2.86%, so LQD currently pays the higher dividend yield.
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