The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Schwab U.S. TIPS ETF (SCHP) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and SCHP is a Schwab ETFs Inflation-Protected Bond fund. So, what’s the difference between ITOT and SCHP? And which fund is better?
The expense ratio of ITOT is 0.02 percentage points lower than SCHP’s (0.03% vs. 0.05%). ITOT also has a high exposure to the technology sector while SCHP is mostly comprised of AAA bonds. Overall, ITOT has provided higher returns than SCHP over the past ten years.
In this article, we’ll compare ITOT vs. SCHP. We’ll look at holdings and risk metrics, as well as at their portfolio growth and fund composition. Moreover, I’ll also discuss ITOT’s and SCHP’s performance, annual returns, and industry exposure and examine how these affect their overall returns.
|Name||iShares Core S&P Total U.S. Stock Market ETF||Schwab U.S. TIPS ETF|
|Category||Large Blend||Inflation-Protected 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 Schwab U.S. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
ITOT’s dividend yield is 0.77% lower than that of SCHP (1.2% vs. 1.97%). Also, ITOT yielded on average 10.68% more per year over the past decade (14.59% vs. 3.92%). The expense ratio of ITOT is 0.02 percentage points lower than SCHP’s (0.03% vs. 0.05%).
|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%.
|SCHP Bond Sectors||Weight|
SCHP’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.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Mean Return of 1.27 with a Standard Deviation of 14.02 and a Sharpe Ratio of 1.04. Its R-squared is 99.4 while ITOT’s Beta is 1.03. Furthermore, the fund has a Alpha of -0.54 and a Treynor Ratio of 14.13.
The Schwab U.S. TIPS ETF (SCHP) has a Beta of 1.17 with a Standard Deviation of 4.32 and a Treynor Ratio of 2.31. Its Sharpe Ratio is 0.64 while SCHP’s Mean Return is 0.28. Furthermore, the fund has a R-squared of 66.16 and a Alpha of -0.5.
ITOT’s Mean Return is 0.99 points higher than that of SCHP and its R-squared is 33.24 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than SCHP. The Alpha and Beta of ITOT are 0.04 points lower and 0.14 points lower than SCHP’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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in ITOT would have resulted in a final balance of $36,427. This is a profit of $26,427 over 10 years and amounts to a compound annual growth rate (CAGR) of 14.59%.
With a $10,000 investment in SCHP, the end total would have been $14,418. This equates to a $4,418 profit over 10 years and a compound annual growth rate (CAGR) of 3.92%.
ITOT’s CAGR is 10.68 percentage points higher than that of SCHP and as a result, would have yielded $22,009 more on a $10,000 investment. Thus, ITOT outperformed SCHP by 10.68% annually.
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