VMO vs VYM
VMO vs VYM
Invesco Municipal Opportunity Trust 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 | VMO | VYM | Winner |
|---|---|---|---|
| Expense Ratio | 1.86% | 0.04% | |
| AUM | $2,934.54 | $79.0B | |
| Dividend Yield | 7.43% | 2.86% | |
| Holdings | 544 | 568 | |
| YTD Return | +7.19% | +15.80% | |
| 1Y Return | +15.33% | +26.12% | |
| 3Y Return (annualized) | +9.09% | +18.25% | |
| 5Y Return (annualized) | -0.53% | +12.51% | |
| Volatility (annualized) | 12.2% | 14.6% | |
| Max Drawdown | -60.0% | -58.8% | |
| Fund Family | Invesco (US) | Vanguard (US) | |
| Category | Tax Preferred | Equity | |
| Inception | Apr 24, 1992 | Nov 10, 2006 |
VMO vs VYM Performance
Invesco Municipal Opportunity Trust (VMO) is a ETF from Invesco (US) and Vanguard High Dividend Yield ETF (VYM) is a ETF from Vanguard (US). Over the past year VMO returned +15.33% while VYM returned +26.12%. Year to date, VMO is up 7.19% versus a gain of 15.80% for VYM.
Over three years, VMO compounded at +9.09% per year against +18.25% for VYM; over five years the annualized figures are -0.53% and +12.51% respectively. Across the full 20-year window we track, VYM has the edge at +7.07% annualized vs -0.05%. 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 12.2% for VMO. 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 -60.0% for VMO 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 0.32. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VMO charges 1.86% per year while VYM charges 0.04%. On a $10,000 position that is $186 vs $4 annually, a gap of $182 per year that compounds over a long holding period. On income, VMO currently yields 7.43% against 2.86% for VYM.
Holdings Overlap
VMO and VYM share 0 holdings out of 831 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, VMO or VYM?
VMO has an expense ratio of 1.86% while VYM charges 0.04%. VYM is the cheaper option. On a $10,000 investment, that is $182 per year of difference.
Which performed better, VMO or VYM?
Over the past year VMO returned +15.33% vs +26.12% for VYM, so VYM leads on 1-year performance. Over the longest common window we track (20 years), VMO annualized -0.05% vs +7.07% for VYM. Past performance does not guarantee future results.
Which is riskier, VMO or VYM?
VYM has been the more volatile fund at 14.6% annualized versus 12.2% for VMO. Worst drawdown: VMO -60.0% vs VYM -58.8%.
Should I hold both VMO and VYM?
VMO and VYM have a monthly-return correlation of 0.32, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VMO and VYM?
VMO and VYM share 0 common holdings with a 0.0% weight overlap. Combined, they hold 831 unique securities.
Which pays a higher dividend, VMO or VYM?
VMO yields 7.43% while VYM yields 2.86%, so VMO currently pays the higher dividend yield.
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