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ITOT vs. IEF: What’s The Difference?

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares 7-10 Year Treasury Bond ETF (IEF) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and IEF is a iShares Long Government fund. So, what’s the difference between ITOT and IEF? And which fund is better?

The expense ratio of ITOT is 0.12 percentage points lower than IEF’s (0.03% vs. 0.15%). ITOT also has a high exposure to the technology sector while IEF is mostly comprised of AAA bonds. Overall, ITOT has provided higher returns than IEF over the past ten years.

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

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Summary

ITOTIEF
NameiShares Core S&P Total U.S. Stock Market ETFiShares 7-10 Year Treasury Bond ETF
CategoryLarge BlendLong Government
IssueriSharesiShares
AUM41.97B13.44B
Avg. Return14.59%5.06%
Div. Yield1.2%0.84%
Expense Ratio0.03%0.15%

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 7-10 Year Treasury Bond ETF (IEF) is a Long Government fund that is issued by iShares. It currently has 13.44B total assets under management and has yielded an average annual return of 5.06% over the past 10 years. The fund has a dividend yield of 0.84% with an expense ratio of 0.15%.

ITOT’s dividend yield is 0.36% higher than that of IEF (1.2% vs. 0.84%). Also, ITOT yielded on average 9.53% more per year over the past decade (14.59% vs. 5.06%). The expense ratio of ITOT is 0.12 percentage points lower than IEF’s (0.03% vs. 0.15%).

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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%.

IEF - Holdings

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

IEF’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

ITOTIEF
Mean Return1.270.32
R-squared99.477.56
Std. Deviation14.025.42
Alpha-0.54-1.2
Beta1.031.59
Sharpe Ratio1.040.6
Treynor Ratio14.131.97

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

The iShares 7-10 Year Treasury Bond ETF (IEF) has a Treynor Ratio of 1.97 with a Sharpe Ratio of 0.6 and a Alpha of -1.2. Its Beta is 1.59 while IEF’s R-squared is 77.56. Furthermore, the fund has a Mean Return of 0.32 and a Standard Deviation of 5.42.

ITOT’s Mean Return is 0.95 points higher than that of IEF and its R-squared is 21.84 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than IEF. The Alpha and Beta of ITOT are 0.66 points higher and 0.56 points lower than IEF’s Alpha and Beta.

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Performance

Annual Returns

ITOT vs. IEF - Annual Returns

YearITOTIEF
202020.75%9.84%
201930.87%8.38%
2018-5.27%0.82%
201721.23%2.47%
201612.59%1.0%
20150.96%1.55%
201413.01%8.92%
201332.67%-6.12%
201215.98%4.06%
20111.55%15.46%
201016.15%9.29%

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 2011 was the strongest year for IEF, returning 15.46% on an annual basis. The poorest year for IEF in the last ten years was 2013, with a yield of -6.12%. Most years the iShares 7-10 Year Treasury Bond ETF has given investors modest returns, such as in 2017, 2012, and 2019, when gains were 2.47%, 4.06%, and 8.38% respectively.

Portfolio Growth

ITOT vs. IEF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ITOT$10,000$42,31014.59%
IEF$10,000$16,9365.06%

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 IEF, the end total would have been $16,936. This equates to a $6,936 profit over 11 years and a compound annual growth rate (CAGR) of 5.06%.

ITOT’s CAGR is 9.53 percentage points higher than that of IEF and as a result, would have yielded $25,374 more on a $10,000 investment. Thus, ITOT outperformed IEF by 9.53% annually.


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