The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and VEU is a Vanguard Foreign Large Blend fund. So, what’s the difference between ITOT and VEU? And which fund is better?
The expense ratio of ITOT is 0.05 percentage points lower than VEU’s (0.03% vs. 0.08%). ITOT also has a higher exposure to the technology sector and a lower standard deviation. Overall, ITOT has provided higher returns than VEU over the past ten years.
In this article, we’ll compare ITOT vs. VEU. We’ll look at portfolio growth and risk metrics, as well as at their holdings and performance. Moreover, I’ll also discuss ITOT’s and VEU’s fund composition, industry exposure, and annual returns and examine how these affect their overall returns.
Summary
| ITOT | VEU | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | Vanguard FTSE All-World ex-US Index Fund ETF Shares |
| Category | Large Blend | Foreign Large Blend |
| Issuer | iShares | Vanguard |
| AUM | 41.97B | 53.64B |
| Avg. Return | 14.59% | 6.64% |
| Div. Yield | 1.2% | 2.31% |
| Expense Ratio | 0.03% | 0.08% |
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 FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
ITOT’s dividend yield is 1.11% lower than that of VEU (1.2% vs. 2.31%). Also, ITOT yielded on average 7.95% more per year over the past decade (14.59% vs. 6.64%). The expense ratio of ITOT is 0.05 percentage points lower than VEU’s (0.03% vs. 0.08%).
Fund Composition
Industry Exposure
| ITOT | VEU | |
| Technology | 24.49% | 12.94% |
| Industrials | 9.21% | 12.19% |
| Energy | 2.51% | 4.69% |
| Communication Services | 10.54% | 7.44% |
| Utilities | 2.35% | 2.89% |
| Healthcare | 13.59% | 9.34% |
| Consumer Defensive | 5.79% | 8.28% |
| Real Estate | 3.67% | 3.04% |
| Financial Services | 13.69% | 18.46% |
| Consumer Cyclical | 11.69% | 12.57% |
| Basic Materials | 2.47% | 8.17% |
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 FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
ITOT is 11.55% more exposed to the Technology sector than VEU (24.49% vs 12.94%). ITOT’s exposure to Financial Services and Healthcare stocks is 4.77% lower and 4.25% higher respectively (13.69% vs. 18.46% and 13.59% vs. 9.34%). In total, Basic Materials, Energy, and Real Estate also make up 7.25% less of the fund’s holdings compared to VEU (8.65% vs. 15.90%).
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%.
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
Risk Analysis
| ITOT | VEU | |
| Mean Return | 1.27 | 0.56 |
| R-squared | 99.4 | 98.44 |
| Std. Deviation | 14.02 | 15.08 |
| Alpha | -0.54 | 0.28 |
| Beta | 1.03 | 0.99 |
| Sharpe Ratio | 1.04 | 0.4 |
| Treynor Ratio | 14.13 | 5.12 |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Mean Return of 1.27 with a Alpha of -0.54 and a R-squared of 99.4. Its Beta is 1.03 while ITOT’s Standard Deviation is 14.02. Furthermore, the fund has a Treynor Ratio of 14.13 and a Sharpe Ratio of 1.04.
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Mean Return of 0.56 with a Treynor Ratio of 5.12 and a Beta of 0.99. Its Alpha is 0.28 while VEU’s R-squared is 98.44. Furthermore, the fund has a Standard Deviation of 15.08 and a Sharpe Ratio of 0.4.
ITOT’s Mean Return is 0.71 points higher than that of VEU and its R-squared is 0.96 points higher. With a Standard Deviation of 14.02, ITOT is slightly less volatile than VEU. The Alpha and Beta of ITOT are 0.82 points lower and 0.04 points higher than VEU’s Alpha and Beta.
Performance
Annual Returns
| Year | ITOT | VEU |
| 2020 | 20.75% | 11.39% |
| 2019 | 30.87% | 21.63% |
| 2018 | -5.27% | -13.97% |
| 2017 | 21.23% | 27.27% |
| 2016 | 12.59% | 4.77% |
| 2015 | 0.96% | -4.67% |
| 2014 | 13.01% | -4.05% |
| 2013 | 32.67% | 14.5% |
| 2012 | 15.98% | 18.55% |
| 2011 | 1.55% | -14.25% |
| 2010 | 16.15% | 11.85% |
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 2017 was the strongest year for VEU, returning 27.27% on an annual basis. The poorest year for VEU in the last ten years was 2011, with a yield of -14.25%. Most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares has given investors modest returns, such as in 2016, 2020, and 2010, when gains were 4.77%, 11.39%, and 11.85% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $42,310 | 14.59% |
| VEU | $10,000 | $18,507 | 6.64% |
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 VEU, the end total would have been $18,507. This equates to a $8,507 profit over 11 years and a compound annual growth rate (CAGR) of 6.64%.
ITOT’s CAGR is 7.95 percentage points higher than that of VEU and as a result, would have yielded $23,803 more on a $10,000 investment. Thus, ITOT outperformed VEU by 7.95% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
