The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares MBS ETF (MBB) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and MBB is a iShares Intermediate Government fund. So, what’s the difference between ITOT and MBB? And which fund is better?
The expense ratio of ITOT is 0.03 percentage points lower than MBB’s (0.03% vs. 0.06%). ITOT also has a high exposure to the technology sector while MBB is mostly comprised of AAA bonds. Overall, ITOT has provided higher returns than MBB over the past ten years.
In this article, we’ll compare ITOT vs. MBB. We’ll look at fund composition and industry exposure, as well as at their annual returns and performance. Moreover, I’ll also discuss ITOT’s and MBB’s holdings, risk metrics, and portfolio growth and examine how these affect their overall returns.
|Name||iShares Core S&P Total U.S. Stock Market ETF||iShares MBS ETF|
|Category||Large Blend||Intermediate Government|
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 MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.
ITOT’s dividend yield is 0.68% lower than that of MBB (1.2% vs. 1.88%). Also, ITOT yielded on average 11.51% more per year over the past decade (14.59% vs. 3.08%). The expense ratio of ITOT is 0.03 percentage points lower than MBB’s (0.03% vs. 0.06%).
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|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%.
|MBB Bond Sectors||Weight|
MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 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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The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Treynor Ratio of 14.13 with a Beta of 1.03 and a Alpha of -0.54. Its Sharpe Ratio is 1.04 while ITOT’s R-squared is 99.4. Furthermore, the fund has a Mean Return of 1.27 and a Standard Deviation of 14.02.
The iShares MBS ETF (MBB) has a Sharpe Ratio of 0.87 with a R-squared of 74.38 and a Standard Deviation of 2.12. Its Alpha is 0.14 while MBB’s Treynor Ratio is 3.02. Furthermore, the fund has a Mean Return of 0.2 and a Beta of 0.6.
ITOT’s Mean Return is 1.07 points higher than that of MBB and its R-squared is 25.02 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than MBB. The Alpha and Beta of ITOT are 0.68 points lower and 0.43 points higher than MBB’s Alpha and Beta.
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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 MBB, returning 6.27% on an annual basis. The poorest year for MBB in the last ten years was 2013, with a yield of -1.92%. Most years the iShares MBS ETF has given investors modest returns, such as in 2012, 2017, and 2020, when gains were 2.23%, 2.37%, and 4.03% 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 MBB, the end total would have been $13,906. This equates to a $3,906 profit over 11 years and a compound annual growth rate (CAGR) of 3.08%.
ITOT’s CAGR is 11.51 percentage points higher than that of MBB and as a result, would have yielded $28,404 more on a $10,000 investment. Thus, ITOT outperformed MBB by 11.51% annually.
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