The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and IGSB is a iShares Short-Term Bond fund. So, what’s the difference between ITOT and IGSB? And which fund is better?
The expense ratio of ITOT is 0.03 percentage points lower than IGSB’s (0.03% vs. 0.06%). ITOT also has a high exposure to the technology sector while IGSB is mostly comprised of BBB bonds. Overall, ITOT has provided higher returns than IGSB over the past ten years.
In this article, we’ll compare ITOT vs. IGSB. We’ll look at holdings and industry exposure, as well as at their risk metrics and performance. Moreover, I’ll also discuss ITOT’s and IGSB’s portfolio growth, fund composition, and annual returns and examine how these affect their overall returns.
Summary
| ITOT | IGSB | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | iShares 1-5 Year Investment Grade Corporate Bond ETF |
| Category | Large Blend | Short-Term Bond |
| Issuer | iShares | iShares |
| AUM | 41.97B | 26.63B |
| Avg. Return | 14.59% | 2.51% |
| Div. Yield | 1.2% | 2.02% |
| Expense Ratio | 0.03% | 0.06% |
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 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
ITOT’s dividend yield is 0.82% lower than that of IGSB (1.2% vs. 2.02%). Also, ITOT yielded on average 12.08% more per year over the past decade (14.59% vs. 2.51%). The expense ratio of ITOT is 0.03 percentage points lower than IGSB’s (0.03% vs. 0.06%).
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%.
| IGSB Bond Sectors | Weight |
| BBB | 50.48% |
| A | 40.04% |
| AA | 7.46% |
| AAA | 2.21% |
| BB | 0.09% |
| Below B | 0.0% |
| B | 0.0% |
| US Government | 0.0% |
| Others | -0.28% |
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
Risk Analysis
| ITOT | IGSB | |
| Mean Return | 1.27 | 0.19 |
| R-squared | 99.4 | 26.13 |
| Std. Deviation | 14.02 | 2 |
| Alpha | -0.54 | 0.69 |
| Beta | 1.03 | 0.34 |
| Sharpe Ratio | 1.04 | 0.82 |
| Treynor Ratio | 14.13 | 4.82 |
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 Sharpe Ratio of 1.04. Its R-squared is 99.4 while ITOT’s Alpha is -0.54. Furthermore, the fund has a Mean Return of 1.27 and a Beta of 1.03.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Alpha of 0.69 with a Mean Return of 0.19 and a Standard Deviation of 2. Its R-squared is 26.13 while IGSB’s Beta is 0.34. Furthermore, the fund has a Sharpe Ratio of 0.82 and a Treynor Ratio of 4.82.
ITOT’s Mean Return is 1.08 points higher than that of IGSB and its R-squared is 73.27 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than IGSB. The Alpha and Beta of ITOT are 1.23 points lower and 0.69 points higher than IGSB’s Alpha and Beta.
Performance
Annual Returns
| Year | ITOT | IGSB |
| 2020 | 20.75% | 5.26% |
| 2019 | 30.87% | 7.01% |
| 2018 | -5.27% | 1.34% |
| 2017 | 21.23% | 1.41% |
| 2016 | 12.59% | 1.77% |
| 2015 | 0.96% | 0.7% |
| 2014 | 13.01% | 0.74% |
| 2013 | 32.67% | 1.03% |
| 2012 | 15.98% | 3.28% |
| 2011 | 1.55% | 1.34% |
| 2010 | 16.15% | 3.69% |
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 IGSB, returning 7.01% on an annual basis. The poorest year for IGSB in the last ten years was 2015, with a yield of 0.7%. Most years the iShares 1-5 Year Investment Grade Corporate Bond ETF has given investors modest returns, such as in 2011, 2017, and 2016, when gains were 1.34%, 1.41%, and 1.77% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $42,310 | 14.59% |
| IGSB | $10,000 | $13,103 | 2.51% |
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 IGSB, the end total would have been $13,103. This equates to a $3,103 profit over 11 years and a compound annual growth rate (CAGR) of 2.51%.
ITOT’s CAGR is 12.08 percentage points higher than that of IGSB and as a result, would have yielded $29,207 more on a $10,000 investment. Thus, ITOT outperformed IGSB by 12.08% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
