TAXF vs VYM
American Century Diversified Municipal Bond ETF vs Vanguard High Dividend Yield ETF
Quick Verdict
VYM has a lower expense ratio. VYM delivered stronger 1-year returns. TAXF offers more diversification with 785 holdings.
Side-by-Side Comparison
| Metric | TAXF | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 0.25% | 0.04% | |
| AUM | $686M | $81.6B | |
| Dividend Yield | 3.84% | 2.24% | |
| Holdings | 785 | 616 | |
| YTD Return | +0.87% | +14.66% | |
| 1Y Return | +5.93% | +22.16% | |
| 3Y Return (annualized) | +4.02% | +18.72% | |
| 5Y Return (annualized) | +0.73% | +12.18% | |
| Volatility (annualized) | 6.0% | 14.6% | |
| Max Drawdown | -13.9% | -58.8% | |
| Fund Family | American Century Investments | Vanguard (US) | |
| Category | Tax Preferred | Equity | |
| Inception | Sep 10, 2018 | Nov 10, 2006 |
TAXF vs VYM Performance
American Century Diversified Municipal Bond ETF (TAXF) is a ETF from American Century Investments and Vanguard High Dividend Yield ETF (VYM) is a ETF from Vanguard (US). Over the past year TAXF returned +5.93% while VYM returned +22.16%. Year to date, TAXF is up 0.87% versus a gain of 14.66% for VYM.
Over three years, TAXF compounded at +4.02% per year against +18.72% for VYM; over five years the annualized figures are +0.73% and +12.18% respectively. Across the full 8-year window we track, VYM has the edge at +7.01% annualized vs +1.92%. 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 6.0% for TAXF. 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 -13.9% for TAXF 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 0.42. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
TAXF charges 0.25% per year while VYM charges 0.04%. On a $10,000 position that is $25 vs $4 annually, a gap of $21 per year that compounds over a long holding period. On income, TAXF currently yields 3.84% against 2.24% for VYM.
Holdings Overlap
TAXF and VYM share 0 holdings out of 1094 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, TAXF or VYM?
TAXF has an expense ratio of 0.25% while VYM charges 0.04%. VYM is the cheaper option. On a $10,000 investment, that is $21 per year of difference.
Which performed better, TAXF or VYM?
Over the past year TAXF returned +5.93% vs +22.16% for VYM, so VYM leads on 1-year performance. Over the longest common window we track (8 years), TAXF annualized +1.92% vs +7.01% for VYM. Past performance does not guarantee future results.
Which is riskier, TAXF or VYM?
VYM has been the more volatile fund at 14.6% annualized versus 6.0% for TAXF. Worst drawdown: TAXF -13.9% vs VYM -58.8%.
Should I hold both TAXF and VYM?
TAXF and VYM have a monthly-return correlation of 0.42, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between TAXF and VYM?
TAXF and VYM share 0 common holdings with a 0.0% weight overlap. Combined, they hold 1094 unique securities.
Which pays a higher dividend, TAXF or VYM?
TAXF yields 3.84% while VYM yields 2.24%, so TAXF currently pays the higher dividend yield.
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