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ITOT vs. GOVT: What’s The Difference?

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares U.S. Treasury Bond ETF (GOVT) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and GOVT is a iShares Intermediate Government fund. So, what’s the difference between ITOT and GOVT? And which fund is better?

The expense ratio of ITOT is 0.02 percentage points lower than GOVT’s (0.03% vs. 0.05%). ITOT also has a high exposure to the technology sector while GOVT is mostly comprised of AAA bonds. Overall, ITOT has provided higher returns than GOVT over the past ten years.

In this article, we’ll compare ITOT vs. GOVT. We’ll look at annual returns and fund composition, as well as at their risk metrics and holdings. Moreover, I’ll also discuss ITOT’s and GOVT’s performance, portfolio growth, and industry exposure and examine how these affect their overall returns.

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Summary

ITOTGOVT
NameiShares Core S&P Total U.S. Stock Market ETFiShares U.S. Treasury Bond ETF
CategoryLarge BlendIntermediate Government
IssueriSharesiShares
AUM41.97B17.07B
Avg. Return14.59%2.67%
Div. Yield1.2%1.0%
Expense Ratio0.03%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 iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

ITOT’s dividend yield is 0.20% higher than that of GOVT (1.2% vs. 1.0%). Also, ITOT yielded on average 11.92% more per year over the past decade (14.59% vs. 2.67%). The expense ratio of ITOT is 0.02 percentage points lower than GOVT’s (0.03% vs. 0.05%).

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Fund Composition

Holdings

ITOT - Holdings

ITOT HoldingsWeight
Apple Inc5.07%
Microsoft Corp4.75%
Amazon.com Inc3.16%
Facebook Inc Class A1.89%
Alphabet Inc Class A1.79%
Alphabet Inc Class C1.71%
Tesla Inc1.17%
Berkshire Hathaway Inc Class B1.17%
NVIDIA Corp1.08%
JPMorgan Chase & Co1.02%

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%.

GOVT - Holdings

GOVT Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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Risk Analysis

ITOTGOVT
Mean Return1.270
R-squared99.40
Std. Deviation14.020
Alpha-0.540
Beta1.030
Sharpe Ratio1.040
Treynor Ratio14.130

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Standard Deviation of 14.02 with a Treynor Ratio of 14.13 and a R-squared of 99.4. Its Mean Return is 1.27 while ITOT’s Alpha is -0.54. Furthermore, the fund has a Beta of 1.03 and a Sharpe Ratio of 1.04.

The iShares U.S. Treasury Bond ETF (GOVT) has a Standard Deviation of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Mean Return is 0 while GOVT’s Sharpe Ratio is 0. Furthermore, the fund has a R-squared of 0 and a Alpha of 0.

ITOT’s Mean Return is 1.27 points higher than that of GOVT and its R-squared is 99.40 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than GOVT. The Alpha and Beta of ITOT are 0.54 points lower and 1.03 points higher than GOVT’s Alpha and Beta.

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Performance

Annual Returns

ITOT vs. GOVT - Annual Returns

YearITOTGOVT
202020.75%7.92%
201930.87%6.71%
2018-5.27%0.74%
201721.23%2.19%
201612.59%0.92%
20150.96%0.76%
201413.01%4.99%
201332.67%-2.84%
201215.98%0.0%
20111.55%0.0%
201016.15%0.0%

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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

ITOT vs. GOVT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ITOT$10,000$30,92814.59%
GOVT$10,000$12,2972.67%

A $10,000 investment in ITOT would have resulted in a final balance of $30,928. This is a profit of $20,928 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.59%.

With a $10,000 investment in GOVT, the end total would have been $12,297. This equates to a $2,297 profit over 8 years and a compound annual growth rate (CAGR) of 2.67%.

ITOT’s CAGR is 11.92 percentage points higher than that of GOVT and as a result, would have yielded $18,631 more on a $10,000 investment. Thus, ITOT outperformed GOVT by 11.92% annually.


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