Key Takeaways:
- VYM attracted $2.3 billion in net inflows year to date, yielding 2.2 percent
- VYMI drew nearly $3 billion, the third-largest haul among dividend ETFs
- VYMI returned 55 percent since early 2025, outpacing VOO's 30 percent gain
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Vanguard high-yield ETFs draw $5.3 billion as dividend demand surges
Two Vanguard high-yield dividend ETFs have each attracted more than $2 billion in net new money in 2026 as investors rotate into income-oriented equity strategies that have outperformed the broader market.
Two Vanguard high-yield dividend ETFs have pulled in a combined $5.3 billion in net inflows this year, as investors shifted toward income strategies that have outperformed the broader market.
"The flows reflect a durable demand for yield in a higher-for-longer rate environment," said Hannah Park, analyst at Edgen. "These funds are attracting investors who prioritize income over capital appreciation."
The Vanguard High Dividend Yield ETF (VYM) took in $2.3 billion year to date, while its international counterpart, the Vanguard International High Dividend Yield ETF (VYMI), drew nearly $3 billion — the third-largest haul among all dividend ETFs. VYM yields 2.2 percent, and VYMI yields 3.45 percent. Since the start of 2025, VYMI has returned 55 percent, compared with a 30 percent gain for the Vanguard S&P 500 ETF (VOO).
The inflows show that high-yield equity strategies are capturing investor dollars even as the S&P 500 continues to hit records. With the Federal Reserve showing no urgency to cut rates, dividend-paying stocks — particularly those with exposure to banks and select technology names — have become a favored destination for yield-seeking capital.
Why High-Yield Equity Is Winning
High-yield dividend ETFs have been one of the better-performing defensive areas of the equity market this year. While they still trail the S&P 500's double-digit advance, they have outperformed dividend growth strategies, offering a combination of higher current income and stronger total returns.
VYM's strategy is straightforward: it screens for the top half of dividend-paying stocks by forward yield. That methodology has produced overweight positions in technology and financials. Broadcom (AVGO) is the fund's largest holding at roughly 8 percent, while several large U.S. banks have benefited from interest rates staying elevated for longer than markets had anticipated at the start of 2025.
VYMI has had the additional tailwind of strong international equity performance. The fund's 55 percent return since the start of 2025 has outpaced the S&P 500 by 25 percentage points, making it one of the best-performing large dividend ETFs over that period.
The Broader Flow Picture
The two Vanguard funds are part of a wider wave of money moving into ETFs. U.S.-listed ETFs absorbed $25.2 billion in the week ending May 22 alone, pushing year-to-date inflows toward $760 billion, according to industry data. Fixed-income ETFs led with $13.2 billion in weekly inflows as the recent bond selloff lifted yields, followed by U.S. equity ETFs at $7.9 billion.
VOO topped the individual fund rankings with $4 billion in weekly inflows, followed by the iShares 0-3 Month Treasury Bond ETF (SGOV) at $2.3 billion and the Invesco QQQ Trust (QQQ) at $2.1 billion.
The environment remains supportive for high-yield equities. Big banks have performed well and should continue to benefit as the Fed holds rates steady. Industrials are beating the S&P 500 as manufacturing demand picks up. Both trends could persist even as artificial intelligence infrastructure spending remains the market's dominant theme, giving income-focused investors multiple avenues for yield without sacrificing total return.
This article is for informational purposes only and does not constitute investment advice.
