The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares 1-3 Year Treasury Bond ETF (SHY) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and SHY is a iShares Short Government fund. So, what’s the difference between ITOT and SHY? And which fund is better?
The expense ratio of ITOT is 0.12 percentage points lower than SHY’s (0.03% vs. 0.15%). ITOT also has a high exposure to the technology sector while SHY is mostly comprised of AAA bonds. Overall, ITOT has provided higher returns than SHY over the past ten years.
In this article, we’ll compare ITOT vs. SHY. We’ll look at holdings and industry exposure, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss ITOT’s and SHY’s performance, portfolio growth, and annual returns and examine how these affect their overall returns.
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Summary
| ITOT | SHY | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | iShares 1-3 Year Treasury Bond ETF |
| Category | Large Blend | Short Government |
| Issuer | iShares | iShares |
| AUM | 41.97B | 19.51B |
| Avg. Return | 14.59% | 1.27% |
| Div. Yield | 1.2% | 0.46% |
| Expense Ratio | 0.03% | 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 1-3 Year Treasury Bond ETF (SHY) is a Short Government fund that is issued by iShares. It currently has 19.51B total assets under management and has yielded an average annual return of 1.27% over the past 10 years. The fund has a dividend yield of 0.46% with an expense ratio of 0.15%.
ITOT’s dividend yield is 0.74% higher than that of SHY (1.2% vs. 0.46%). Also, ITOT yielded on average 13.32% more per year over the past decade (14.59% vs. 1.27%). The expense ratio of ITOT is 0.12 percentage points lower than SHY’s (0.03% vs. 0.15%).
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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%.
| SHY Bond Sectors | Weight |
| AAA | 99.67% |
| Others | 0.33% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
SHY’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.67%, 0.33%, 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.
Risk Analysis
| ITOT | SHY | |
| Mean Return | 1.27 | 0.09 |
| R-squared | 99.4 | 39.11 |
| Std. Deviation | 14.02 | 0.89 |
| Alpha | -0.54 | -0.03 |
| Beta | 1.03 | 0.18 |
| Sharpe Ratio | 1.04 | 0.54 |
| Treynor Ratio | 14.13 | 2.6 |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Beta of 1.03 with a Sharpe Ratio of 1.04 and a R-squared of 99.4. Its Treynor Ratio is 14.13 while ITOT’s Mean Return is 1.27. Furthermore, the fund has a Standard Deviation of 14.02 and a Alpha of -0.54.
The iShares 1-3 Year Treasury Bond ETF (SHY) has a Standard Deviation of 0.89 with a R-squared of 39.11 and a Beta of 0.18. Its Alpha is -0.03 while SHY’s Sharpe Ratio is 0.54. Furthermore, the fund has a Mean Return of 0.09 and a Treynor Ratio of 2.6.
ITOT’s Mean Return is 1.18 points higher than that of SHY and its R-squared is 60.29 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than SHY. The Alpha and Beta of ITOT are 0.51 points lower and 0.85 points higher than SHY’s Alpha and Beta.
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Performance
Annual Returns
| Year | ITOT | SHY |
| 2020 | 20.75% | 3.01% |
| 2019 | 30.87% | 3.42% |
| 2018 | -5.27% | 1.45% |
| 2017 | 21.23% | 0.27% |
| 2016 | 12.59% | 0.75% |
| 2015 | 0.96% | 0.43% |
| 2014 | 13.01% | 0.48% |
| 2013 | 32.67% | 0.23% |
| 2012 | 15.98% | 0.31% |
| 2011 | 1.55% | 1.43% |
| 2010 | 16.15% | 2.23% |
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 SHY, returning 3.42% on an annual basis. The poorest year for SHY in the last ten years was 2013, with a yield of 0.23%. Most years the iShares 1-3 Year Treasury Bond ETF has given investors modest returns, such as in 2014, 2016, and 2011, when gains were 0.48%, 0.75%, and 1.43% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $42,310 | 14.59% |
| SHY | $10,000 | $11,486 | 1.27% |
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 SHY, the end total would have been $11,486. This equates to a $1,486 profit over 11 years and a compound annual growth rate (CAGR) of 1.27%.
ITOT’s CAGR is 13.32 percentage points higher than that of SHY and as a result, would have yielded $30,824 more on a $10,000 investment. Thus, ITOT outperformed SHY by 13.32% annually.
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