The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and HYG is a iShares High Yield Bond fund. So, what’s the difference between ITOT and HYG? And which fund is better?
The expense ratio of ITOT is 0.45 percentage points lower than HYG’s (0.03% vs. 0.48%). ITOT also has a high exposure to the technology sector while HYG is mostly comprised of BB bonds. Overall, ITOT has provided higher returns than HYG over the past ten years.
In this article, we’ll compare ITOT vs. HYG. We’ll look at annual returns and portfolio growth, as well as at their holdings and performance. Moreover, I’ll also discuss ITOT’s and HYG’s industry exposure, risk metrics, and fund composition and examine how these affect their overall returns.
|Name||iShares Core S&P Total U.S. Stock Market ETF||iShares iBoxx $ High Yield Corporate Bond ETF|
|Category||Large Blend||High Yield Bond|
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 iBoxx $ High Yield Corporate Bond ETF (HYG) is a High Yield Bond fund that is issued by iShares. It currently has 20.03B total assets under management and has yielded an average annual return of 6.42% over the past 10 years. The fund has a dividend yield of 4.44% with an expense ratio of 0.48%.
ITOT’s dividend yield is 3.24% lower than that of HYG (1.2% vs. 4.44%). Also, ITOT yielded on average 8.17% more per year over the past decade (14.59% vs. 6.42%). The expense ratio of ITOT is 0.45 percentage points lower than HYG’s (0.03% vs. 0.48%).
|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%.
|HYG Bond Sectors||Weight|
HYG’s Top Bond Sectors are ratings of BB, B, Below B, BBB, and AAA at 56.53%, 31.27%, 11.4%, 0.61%, and 0.28%. The fund is less weighted towards A (0.0%), AA (0.0%), and US Government (0.0%) rated bonds.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Beta of 1.03 with a Alpha of -0.54 and a Sharpe Ratio of 1.04. Its R-squared is 99.4 while ITOT’s Treynor Ratio is 14.13. Furthermore, the fund has a Mean Return of 1.27 and a Standard Deviation of 14.02.
The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a Beta of 0.48 with a Mean Return of 0.46 and a Alpha of 3.58. Its Sharpe Ratio is 0.7 while HYG’s Standard Deviation is 6.96. Furthermore, the fund has a R-squared of 4.1 and a Treynor Ratio of 10.01.
ITOT’s Mean Return is 0.81 points higher than that of HYG and its R-squared is 95.30 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than HYG. The Alpha and Beta of ITOT are 4.12 points lower and 0.55 points higher than HYG’s Alpha and Beta.
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 HYG, returning 14.23% on an annual basis. The poorest year for HYG in the last ten years was 2015, with a yield of -5.55%. Most years the iShares iBoxx $ High Yield Corporate Bond ETF has given investors modest returns, such as in 2011, 2013, and 2017, when gains were 5.89%, 5.9%, and 6.09% 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 HYG, the end total would have been $19,427. This equates to a $9,427 profit over 11 years and a compound annual growth rate (CAGR) of 6.42%.
ITOT’s CAGR is 8.17 percentage points higher than that of HYG and as a result, would have yielded $22,883 more on a $10,000 investment. Thus, ITOT outperformed HYG by 8.17% annually.
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