Why This Vanguard ETF Doesn't Belong in Your Portfolio

Group 1 - Vanguard has established a strong reputation on Wall Street due to its conservatively managed business model and low-cost investment products [1] - The company is the second-largest ETF issuer globally, managing over $4 trillion in assets, and is on track to potentially surpass BlackRock in the next year or two [1] - Vanguard offers more than 100 ETFs, most with expense ratios of 0.1% or less, but not all ETFs are equally recommended [2] Group 2 - The Vanguard High Dividend Yield ETF (VYM) is the third-largest dividend ETF with over $72 billion in assets and an expense ratio of 0.04% [3] - The ETF has a yield of 2.3%, which is more than double that of the S&P 500, making it appear attractive at first glance [3] - The fund tracks the FTSE High Dividend Yield Index, which includes companies with above-average dividend yields, but the selection methodology is criticized for being too lax [4] Group 3 - The definition of "high yield" used by the ETF is considered too loose, allowing stocks with yields only slightly above the average to qualify [5] - A more selective high-yield strategy is suggested, either by narrowing the number of qualifying stocks or setting a minimum yield threshold [6] - The ETF holds over 500 stocks, which may dilute the portfolio's effectiveness, indicating a need for a more focused high-yield strategy [7]