The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and EMB is a iShares Emerging Markets Bond fund. So, what’s the difference between ITOT and EMB? And which fund is better?
The expense ratio of ITOT is 0.36 percentage points lower than EMB’s (0.03% vs. 0.39%). ITOT also has a high exposure to the technology sector while EMB is mostly comprised of BBB bonds. Overall, ITOT has provided higher returns than EMB over the past ten years.
In this article, we’ll compare ITOT vs. EMB. We’ll look at holdings and risk metrics, as well as at their annual returns and industry exposure. Moreover, I’ll also discuss ITOT’s and EMB’s fund composition, portfolio growth, and performance and examine how these affect their overall returns.
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Summary
| ITOT | EMB | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | iShares J.P. Morgan USD Emerging Markets Bond ETF |
| Category | Large Blend | Emerging Markets Bond |
| Issuer | iShares | iShares |
| AUM | 41.97B | 19.76B |
| Avg. Return | 14.59% | 6.43% |
| Div. Yield | 1.2% | 3.85% |
| Expense Ratio | 0.03% | 0.39% |
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 J.P. Morgan USD Emerging Markets Bond ETF (EMB) is a Emerging Markets Bond fund that is issued by iShares. It currently has 19.76B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 3.85% with an expense ratio of 0.39%.
ITOT’s dividend yield is 2.65% lower than that of EMB (1.2% vs. 3.85%). Also, ITOT yielded on average 8.16% more per year over the past decade (14.59% vs. 6.43%). The expense ratio of ITOT is 0.36 percentage points lower than EMB’s (0.03% vs. 0.39%).
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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%.
| EMB Bond Sectors | Weight |
| BBB | 33.79% |
| B | 21.97% |
| BB | 16.92% |
| A | 13.67% |
| AA | 7.97% |
| Below B | 4.49% |
| Others | 1.11% |
| AAA | 0.09% |
| US Government | 0.0% |
EMB’s Top Bond Sectors are ratings of BBB, B, BB, A, and AA at 33.79%, 21.97%, 16.92%, 13.67%, and 7.97%. The fund is less weighted towards Below B (4.49%), Others (1.11%), and AAA (0.09%) rated bonds.
Risk Analysis
| ITOT | EMB | |
| Mean Return | 1.27 | 0.44 |
| R-squared | 99.4 | 23.34 |
| Std. Deviation | 14.02 | 8.44 |
| Alpha | -0.54 | 0.89 |
| Beta | 1.03 | 1.36 |
| Sharpe Ratio | 1.04 | 0.55 |
| Treynor Ratio | 14.13 | 3.24 |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Treynor Ratio of 14.13 with a Standard Deviation of 14.02 and a Sharpe Ratio of 1.04. Its Mean Return is 1.27 while ITOT’s R-squared is 99.4. Furthermore, the fund has a Beta of 1.03 and a Alpha of -0.54.
The iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) has a Beta of 1.36 with a R-squared of 23.34 and a Mean Return of 0.44. Its Standard Deviation is 8.44 while EMB’s Treynor Ratio is 3.24. Furthermore, the fund has a Alpha of 0.89 and a Sharpe Ratio of 0.55.
ITOT’s Mean Return is 0.83 points higher than that of EMB and its R-squared is 76.06 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than EMB. The Alpha and Beta of ITOT are 1.43 points lower and 0.33 points lower than EMB’s Alpha and Beta.
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Performance
Annual Returns
| Year | ITOT | EMB |
| 2020 | 20.75% | 5.48% |
| 2019 | 30.87% | 15.57% |
| 2018 | -5.27% | -5.67% |
| 2017 | 21.23% | 9.98% |
| 2016 | 12.59% | 9.41% |
| 2015 | 0.96% | 0.43% |
| 2014 | 13.01% | 6.69% |
| 2013 | 32.67% | -7.42% |
| 2012 | 15.98% | 17.64% |
| 2011 | 1.55% | 7.2% |
| 2010 | 16.15% | 11.47% |
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 2012 was the strongest year for EMB, returning 17.64% on an annual basis. The poorest year for EMB in the last ten years was 2013, with a yield of -7.42%. Most years the iShares J.P. Morgan USD Emerging Markets Bond ETF has given investors modest returns, such as in 2014, 2011, and 2016, when gains were 6.69%, 7.2%, and 9.41% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $42,310 | 14.59% |
| EMB | $10,000 | $19,295 | 6.43% |
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 EMB, the end total would have been $19,295. This equates to a $9,295 profit over 11 years and a compound annual growth rate (CAGR) of 6.43%.
ITOT’s CAGR is 8.16 percentage points higher than that of EMB and as a result, would have yielded $23,015 more on a $10,000 investment. Thus, ITOT outperformed EMB by 8.16% annually.
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