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ITOT vs. USMV: What’s The Difference?

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the iShares MSCI USA Min Vol Factor ETF (USMV) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and USMV is a iShares Large Blend fund. So, what’s the difference between ITOT and USMV? And which fund is better?

The expense ratio of ITOT is 0.12 percentage points lower than USMV’s (0.03% vs. 0.15%). ITOT also has a higher exposure to the technology sector and a higher standard deviation. Overall, ITOT has provided higher returns than USMV over the past ten years.

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

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Summary

ITOTUSMV
NameiShares Core S&P Total U.S. Stock Market ETFiShares MSCI USA Min Vol Factor ETF
CategoryLarge BlendLarge Blend
IssueriSharesiShares
AUM41.97B27.6B
Avg. Return14.59%13.89%
Div. Yield1.2%1.5%
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 MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

ITOT’s dividend yield is 0.30% lower than that of USMV (1.2% vs. 1.5%). Also, ITOT yielded on average 0.70% more per year over the past decade (14.59% vs. 13.89%). The expense ratio of ITOT is 0.12 percentage points lower than USMV’s (0.03% vs. 0.15%).

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Fund Composition

Industry Exposure

ITOT vs. USMV - Industry Exposure

ITOTUSMV
Technology24.49%20.53%
Industrials9.21%10.51%
Energy2.51%0.21%
Communication Services10.54%11.03%
Utilities2.35%6.93%
Healthcare13.59%18.42%
Consumer Defensive5.79%12.82%
Real Estate3.67%2.73%
Financial Services13.69%9.65%
Consumer Cyclical11.69%5.53%
Basic Materials2.47%1.65%

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.

ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.

The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

ITOT is 3.96% more exposed to the Technology sector than USMV (24.49% vs 20.53%). ITOT’s exposure to Financial Services and Healthcare stocks is 4.04% higher and 4.83% lower respectively (13.69% vs. 9.65% and 13.59% vs. 18.42%). In total, Basic Materials, Energy, and Real Estate also make up 4.06% more of the fund’s holdings compared to USMV (8.65% vs. 4.59%).

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%.

USMV - Holdings

USMV HoldingsWeight
Eli Lilly and Co1.64%
Microsoft Corp1.62%
T-Mobile US Inc1.51%
Accenture PLC Class A1.51%
Visa Inc Class A1.49%
Waste Management Inc1.45%
Adobe Inc1.45%
The Kroger Co1.44%
Johnson & Johnson1.42%
Gilead Sciences Inc1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

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Risk Analysis

ITOTUSMV
Mean Return1.270
R-squared99.40
Std. Deviation14.020
Alpha-0.540
Beta1.030
Sharpe Ratio1.040
Treynor Ratio14.130

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

The iShares MSCI USA Min Vol Factor ETF (USMV) has a Treynor Ratio of 0 with a Mean Return of 0 and a Beta of 0. Its R-squared is 0 while USMV’s Standard Deviation is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Alpha of 0.

ITOT’s Mean Return is 1.27 points higher than that of USMV and its R-squared is 99.40 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than USMV. The Alpha and Beta of ITOT are 0.54 points lower and 1.03 points higher than USMV’s Alpha and Beta.

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Performance

Annual Returns

ITOT vs. USMV - Annual Returns

YearITOTUSMV
202020.75%5.6%
201930.87%27.77%
2018-5.27%1.36%
201721.23%18.97%
201612.59%10.5%
20150.96%5.5%
201413.01%16.34%
201332.67%25.11%
201215.98%11.04%
20111.55%0.0%
201016.15%0.0%

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 USMV, returning 27.77% on an annual basis. The poorest year for USMV in the last ten years was 2011, with a yield of 0.0%. Most years the iShares MSCI USA Min Vol Factor ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 5.6%, 10.5%, and 11.04% respectively.

Portfolio Growth

ITOT vs. USMV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ITOT$10,000$30,92814.59%
USMV$10,000$27,60713.89%

A $10,000 investment in ITOT would have resulted in a final balance of $30,928. This is a profit of $20,928 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.59%.

With a $10,000 investment in USMV, the end total would have been $27,607. This equates to a $17,607 profit over 8 years and a compound annual growth rate (CAGR) of 13.89%.

ITOT’s CAGR is 0.70 percentage points higher than that of USMV and as a result, would have yielded $3,321 more on a $10,000 investment. Thus, ITOT outperformed USMV by 0.70% annually.


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