The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Vanguard Short-Term Bond Index Fund ETF Shares (BSV) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and BSV is a Vanguard Short-Term Bond fund. So, what’s the difference between ITOT and BSV? And which fund is better?
The expense ratio of ITOT is 0.02 percentage points lower than BSV’s (0.03% vs. 0.05%). ITOT also has a high exposure to the technology sector while BSV is mostly comprised of AAA bonds. Overall, ITOT has provided higher returns than BSV over the past ten years.
In this article, we’ll compare ITOT vs. BSV. We’ll look at performance and annual returns, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss ITOT’s and BSV’s portfolio growth, fund composition, and holdings and examine how these affect their overall returns.
Summary
| ITOT | BSV | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | Vanguard Short-Term Bond Index Fund ETF Shares |
| Category | Large Blend | Short-Term Bond |
| Issuer | iShares | Vanguard |
| AUM | 41.97B | 67.71B |
| Avg. Return | 14.59% | 2.27% |
| Div. Yield | 1.2% | 1.48% |
| Expense Ratio | 0.03% | 0.05% |
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 Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 0.05%.
ITOT’s dividend yield is 0.28% lower than that of BSV (1.2% vs. 1.48%). Also, ITOT yielded on average 12.32% more per year over the past decade (14.59% vs. 2.27%). The expense ratio of ITOT is 0.02 percentage points lower than BSV’s (0.03% vs. 0.05%).
Fund Composition
Holdings
| ITOT Holdings | Weight |
| Apple Inc | 5.07% |
| Microsoft Corp | 4.75% |
| Amazon.com Inc | 3.16% |
| Facebook Inc Class A | 1.89% |
| Alphabet Inc Class A | 1.79% |
| Alphabet Inc Class C | 1.71% |
| Tesla Inc | 1.17% |
| Berkshire Hathaway Inc Class B | 1.17% |
| NVIDIA Corp | 1.08% |
| 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%.
| BSV Bond Sectors | Weight |
| AAA | 71.65% |
| BBB | 13.08% |
| A | 11.95% |
| AA | 3.28% |
| Others | 0.03% |
| Below B | 0.01% |
| B | 0.0% |
| BB | 0.0% |
| US Government | 0.0% |
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
Risk Analysis
| ITOT | BSV | |
| Mean Return | 1.27 | 0.16 |
| R-squared | 99.4 | 78.38 |
| Std. Deviation | 14.02 | 1.33 |
| Alpha | -0.54 | 0.21 |
| Beta | 1.03 | 0.38 |
| Sharpe Ratio | 1.04 | 0.98 |
| Treynor Ratio | 14.13 | 3.33 |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Treynor Ratio of 14.13 with a Beta of 1.03 and a Alpha of -0.54. Its R-squared is 99.4 while ITOT’s Standard Deviation is 14.02. Furthermore, the fund has a Mean Return of 1.27 and a Sharpe Ratio of 1.04.
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a Sharpe Ratio of 0.98 with a R-squared of 78.38 and a Mean Return of 0.16. Its Beta is 0.38 while BSV’s Standard Deviation is 1.33. Furthermore, the fund has a Treynor Ratio of 3.33 and a Alpha of 0.21.
ITOT’s Mean Return is 1.11 points higher than that of BSV and its R-squared is 21.02 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than BSV. The Alpha and Beta of ITOT are 0.75 points lower and 0.65 points higher than BSV’s Alpha and Beta.
Performance
Annual Returns
| Year | ITOT | BSV |
| 2020 | 20.75% | 4.67% |
| 2019 | 30.87% | 4.92% |
| 2018 | -5.27% | 1.34% |
| 2017 | 21.23% | 1.2% |
| 2016 | 12.59% | 1.42% |
| 2015 | 0.96% | 0.92% |
| 2014 | 13.01% | 1.32% |
| 2013 | 32.67% | 0.17% |
| 2012 | 15.98% | 1.98% |
| 2011 | 1.55% | 3.04% |
| 2010 | 16.15% | 4.0% |
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 BSV, returning 4.92% on an annual basis. The poorest year for BSV in the last ten years was 2013, with a yield of 0.17%. Most years the Vanguard Short-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2018, 2016, and 2012, when gains were 1.34%, 1.42%, and 1.98% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $42,310 | 14.59% |
| BSV | $10,000 | $12,785 | 2.27% |
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 BSV, the end total would have been $12,785. This equates to a $2,785 profit over 11 years and a compound annual growth rate (CAGR) of 2.27%.
ITOT’s CAGR is 12.32 percentage points higher than that of BSV and as a result, would have yielded $29,525 more on a $10,000 investment. Thus, ITOT outperformed BSV by 12.32% annually.
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