The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Vanguard Small-Cap Value Index Fund ETF Shares (VBR) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and VBR is a Vanguard Small Value fund. So, what’s the difference between ITOT and VBR? And which fund is better?
The expense ratio of ITOT is 0.04 percentage points lower than VBR’s (0.03% vs. 0.07%). ITOT also has a higher exposure to the technology sector and a lower standard deviation. Overall, ITOT has provided higher returns than VBR over the past ten years.
In this article, we’ll compare ITOT vs. VBR. We’ll look at annual returns and industry exposure, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss ITOT’s and VBR’s portfolio growth, holdings, and performance and examine how these affect their overall returns.
Summary
| ITOT | VBR | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | Vanguard Small-Cap Value Index Fund ETF Shares |
| Category | Large Blend | Small Value |
| Issuer | iShares | Vanguard |
| AUM | 41.97B | 48.08B |
| Avg. Return | 14.59% | 12.28% |
| Div. Yield | 1.2% | 1.6% |
| Expense Ratio | 0.03% | 0.07% |
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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) is a Small Value fund that is issued by Vanguard. It currently has 48.08B total assets under management and has yielded an average annual return of 12.28% over the past 10 years. The fund has a dividend yield of 1.6% with an expense ratio of 0.07%.
ITOT’s dividend yield is 0.40% lower than that of VBR (1.2% vs. 1.6%). Also, ITOT yielded on average 2.31% more per year over the past decade (14.59% vs. 12.28%). The expense ratio of ITOT is 0.04 percentage points lower than VBR’s (0.03% vs. 0.07%).
Fund Composition
Industry Exposure
| ITOT | VBR | |
| Technology | 24.49% | 8.39% |
| Industrials | 9.21% | 18.44% |
| Energy | 2.51% | 5.15% |
| Communication Services | 10.54% | 1.77% |
| Utilities | 2.35% | 3.65% |
| Healthcare | 13.59% | 7.16% |
| Consumer Defensive | 5.79% | 4.36% |
| Real Estate | 3.67% | 10.92% |
| Financial Services | 13.69% | 20.04% |
| Consumer Cyclical | 11.69% | 13.82% |
| Basic Materials | 2.47% | 6.31% |
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 Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has the most exposure to the Financial Services sector at 20.04%. This is followed by Industrials and Consumer Cyclical at 18.44% and 13.82% respectively. Utilities (3.65%), Consumer Defensive (4.36%), and Energy (5.15%) only make up 13.16% of the fund’s total assets.
VBR’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.31%, 7.16%, 8.39%, 10.92%, and 13.82%.
ITOT is 16.10% more exposed to the Technology sector than VBR (24.49% vs 8.39%). ITOT’s exposure to Financial Services and Healthcare stocks is 6.35% lower and 6.43% higher respectively (13.69% vs. 20.04% and 13.59% vs. 7.16%). In total, Basic Materials, Energy, and Real Estate also make up 13.73% less of the fund’s holdings compared to VBR (8.65% vs. 22.38%).
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%.
| VBR Holdings | Weight |
| Diamondback Energy Inc | 0.55% |
| VICI Properties Inc Ordinary Shares | 0.54% |
| IDEX Corp | 0.54% |
| Nuance Communications Inc | 0.5% |
| Molina Healthcare Inc | 0.48% |
| Signature Bank | 0.46% |
| Novavax Inc | 0.44% |
| Howmet Aerospace Inc | 0.44% |
| Apollo Global Management Inc Class A | 0.42% |
| Brown & Brown Inc | 0.41% |
VBR’s Top Holdings are Diamondback Energy Inc, VICI Properties Inc Ordinary Shares, IDEX Corp, Nuance Communications Inc, and Molina Healthcare Inc at 0.55%, 0.54%, 0.54%, 0.5%, and 0.48%.
Signature Bank (0.46%), Novavax Inc (0.44%), and Howmet Aerospace Inc (0.44%) have a slightly smaller but still significant weight. Apollo Global Management Inc Class A and Brown & Brown Inc are also represented in the VBR’s holdings at 0.42% and 0.41%.
Risk Analysis
| ITOT | VBR | |
| Mean Return | 1.27 | 1.08 |
| R-squared | 99.4 | 82.2 |
| Std. Deviation | 14.02 | 18.37 |
| Alpha | -0.54 | -5.09 |
| Beta | 1.03 | 1.23 |
| Sharpe Ratio | 1.04 | 0.67 |
| Treynor Ratio | 14.13 | 9.15 |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Mean Return of 1.27 with a Treynor Ratio of 14.13 and a R-squared of 99.4. Its Sharpe Ratio is 1.04 while ITOT’s Standard Deviation is 14.02. Furthermore, the fund has a Beta of 1.03 and a Alpha of -0.54.
The Vanguard Small-Cap Value Index Fund ETF Shares (VBR) has a Beta of 1.23 with a R-squared of 82.2 and a Alpha of -5.09. Its Mean Return is 1.08 while VBR’s Sharpe Ratio is 0.67. Furthermore, the fund has a Treynor Ratio of 9.15 and a Standard Deviation of 18.37.
ITOT’s Mean Return is 0.19 points higher than that of VBR and its R-squared is 17.20 points higher. With a Standard Deviation of 14.02, ITOT is slightly less volatile than VBR. The Alpha and Beta of ITOT are 4.55 points higher and 0.20 points lower than VBR’s Alpha and Beta.
Performance
Annual Returns
| Year | ITOT | VBR |
| 2020 | 20.75% | 5.82% |
| 2019 | 30.87% | 22.76% |
| 2018 | -5.27% | -12.22% |
| 2017 | 21.23% | 11.79% |
| 2016 | 12.59% | 24.8% |
| 2015 | 0.96% | -4.67% |
| 2014 | 13.01% | 10.55% |
| 2013 | 32.67% | 36.57% |
| 2012 | 15.98% | 18.78% |
| 2011 | 1.55% | -4.05% |
| 2010 | 16.15% | 24.97% |
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 2013 was the strongest year for VBR, returning 36.57% on an annual basis. The poorest year for VBR in the last ten years was 2018, with a yield of -12.22%. Most years the Vanguard Small-Cap Value Index Fund ETF Shares has given investors modest returns, such as in 2014, 2017, and 2012, when gains were 10.55%, 11.79%, and 18.78% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $42,310 | 14.59% |
| VBR | $10,000 | $32,611 | 12.28% |
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 VBR, the end total would have been $32,611. This equates to a $22,611 profit over 11 years and a compound annual growth rate (CAGR) of 12.28%.
ITOT’s CAGR is 2.31 percentage points higher than that of VBR and as a result, would have yielded $9,699 more on a $10,000 investment. Thus, ITOT outperformed VBR by 2.31% annually.
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