VYM vs XLU
Vanguard High Dividend Yield ETF vs State Street Utilities Select Sector SPDR ETF
Quick Verdict
VYM has a lower expense ratio. VYM delivered stronger 1-year returns. VYM offers more diversification with 613 holdings.
Side-by-Side Comparison
| Metric | VYM | XLU | Winner |
|---|---|---|---|
| Expense Ratio | 0.04% | 0.08% | |
| AUM | $81.6B | $22.0B | |
| Dividend Yield | 2.24% | 2.70% | |
| Holdings | 613 | 34 | |
| YTD Return | +14.87% | +0.15% | |
| 1Y Return | +21.39% | +4.38% | |
| 3Y Return (annualized) | +18.69% | +14.87% | |
| 5Y Return (annualized) | +11.98% | +7.20% | |
| Volatility (annualized) | 14.5% | 15.1% | |
| Max Drawdown | -58.8% | -55.7% | |
| Fund Family | Vanguard (US) | SPDR State Street Global Advisors | |
| Category | Equity | Equity | |
| Inception | Nov 10, 2006 | Dec 16, 1998 |
VYM vs XLU Performance
Vanguard High Dividend Yield ETF (VYM) is a ETF from Vanguard (US) and State Street Utilities Select Sector SPDR ETF (XLU) is a ETF from SPDR State Street Global Advisors. Over the past year VYM returned +21.39% while XLU returned +4.38%. Year to date, VYM is up 14.87% versus a gain of 0.15% for XLU.
Over three years, VYM compounded at +18.69% per year against +14.87% for XLU; over five years the annualized figures are +11.98% and +7.20% respectively. Across the full 20-year window we track, VYM has the edge at +7.00% annualized vs +4.49%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
XLU has been the more volatile fund, with annualized monthly volatility of 15.1% compared with 14.5% 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 -58.8% for VYM and -55.7% for XLU. 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 0.54. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
VYM charges 0.04% per year while XLU charges 0.08%. On a $10,000 position that is $4 vs $8 annually, a gap of $4 per year that compounds over a long holding period. On income, VYM currently yields 2.24% against 2.70% for XLU.
Holdings Overlap
VYM and XLU share 28 holdings out of 607 unique holdings combined, representing a 5.2% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VYM or XLU?
VYM has an expense ratio of 0.04% while XLU charges 0.08%. VYM is the cheaper option. On a $10,000 investment, that is $4 per year of difference.
Which performed better, VYM or XLU?
Over the past year VYM returned +21.39% vs +4.38% for XLU, so VYM leads on 1-year performance. Over the longest common window we track (20 years), VYM annualized +7.00% vs +4.49% for XLU. Past performance does not guarantee future results.
Which is riskier, VYM or XLU?
XLU has been the more volatile fund at 15.1% annualized versus 14.5% for VYM. Worst drawdown: VYM -58.8% vs XLU -55.7%.
Should I hold both VYM and XLU?
VYM and XLU have a monthly-return correlation of 0.54, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VYM and XLU?
VYM and XLU share 28 common holdings with a 5.2% weight overlap. Combined, they hold 607 unique securities.
Which pays a higher dividend, VYM or XLU?
VYM yields 2.24% while XLU yields 2.70%, so XLU currently pays the higher dividend yield.
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