The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and ACWI is a iShares N/A fund. So, what’s the difference between ITOT and ACWI? And which fund is better?
The expense ratio of ITOT is 0.29 percentage points lower than ACWI’s (0.03% vs. 0.32%). ITOT also has a higher exposure to the technology sector and a lower standard deviation. Overall, ITOT has provided higher returns than ACWI over the past ten years.
In this article, we’ll compare ITOT vs. ACWI. We’ll look at risk metrics and annual returns, as well as at their industry exposure and holdings. Moreover, I’ll also discuss ITOT’s and ACWI’s performance, fund composition, and portfolio growth and examine how these affect their overall returns.
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|Name||iShares Core S&P Total U.S. Stock Market ETF||iShares MSCI ACWI ETF|
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
ITOT’s dividend yield is 0.19% lower than that of ACWI (1.2% vs. 1.39%). Also, ITOT yielded on average 4.38% more per year over the past decade (14.59% vs. 10.21%). The expense ratio of ITOT is 0.29 percentage points lower than ACWI’s (0.03% vs. 0.32%).
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The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.
ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.
The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
ITOT is 4.08% more exposed to the Technology sector than ACWI (24.49% vs 20.41%). ITOT’s exposure to Financial Services and Healthcare stocks is 1.89% lower and 1.85% higher respectively (13.69% vs. 15.58% and 13.59% vs. 11.74%). In total, Basic Materials, Energy, and Real Estate also make up 2.31% less of the fund’s holdings compared to ACWI (8.65% vs. 10.96%).
|Facebook Inc Class A||1.89%|
|Alphabet Inc Class A||1.79%|
|Alphabet Inc Class C||1.71%|
|Berkshire Hathaway Inc Class B||1.17%|
|JPMorgan Chase & Co||1.02%|
ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.
Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.
|Facebook Inc A||1.25%|
|Alphabet Inc Class C||1.12%|
|Alphabet Inc A||1.09%|
|Taiwan Semiconductor Manufacturing Co Ltd||0.79%|
|JPMorgan Chase & Co||0.71%|
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Sharpe Ratio of 1.04 with a Standard Deviation of 14.02 and a Mean Return of 1.27. Its Alpha is -0.54 while ITOT’s Treynor Ratio is 14.13. Furthermore, the fund has a Beta of 1.03 and a R-squared of 99.4.
The iShares MSCI ACWI ETF (ACWI) has a Treynor Ratio of 9.45 with a Beta of 1 and a Standard Deviation of 14.05. Its Alpha is 0.15 while ACWI’s R-squared is 99.96. Furthermore, the fund has a Mean Return of 0.89 and a Sharpe Ratio of 0.71.
ITOT’s Mean Return is 0.38 points higher than that of ACWI and its R-squared is 0.56 points lower. With a Standard Deviation of 14.02, ITOT is slightly less volatile than ACWI. The Alpha and Beta of ITOT are 0.69 points lower and 0.03 points higher than ACWI’s Alpha and Beta.
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ITOT had its best year in 2013 with an annual return of 32.67%. ITOT’s worst year over the past decade yielded -5.27% and occurred in 2018. In most years the iShares Core S&P Total U.S. Stock Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.01%, 15.98%, and 16.15% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in ITOT would have resulted in a final balance of $42,310. This is a profit of $32,310 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.59%.
With a $10,000 investment in ACWI, the end total would have been $27,241. This equates to a $17,241 profit over 11 years and a compound annual growth rate (CAGR) of 10.21%.
ITOT’s CAGR is 4.38 percentage points higher than that of ACWI and as a result, would have yielded $15,069 more on a $10,000 investment. Thus, ITOT outperformed ACWI by 4.38% annually.
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