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ITOT vs. VGK: What’s The Difference?

The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Vanguard FTSE Europe Index Fund ETF Shares (VGK) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and VGK is a Vanguard Europe Stock fund. So, what’s the difference between ITOT and VGK? And which fund is better?

The expense ratio of ITOT is 0.05 percentage points lower than VGK’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 VGK over the past ten years.

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

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Summary

ITOTVGK
NameiShares Core S&P Total U.S. Stock Market ETFVanguard FTSE Europe Index Fund ETF Shares
CategoryLarge BlendEurope Stock
IssueriSharesVanguard
AUM41.97B25.7B
Avg. Return14.59%6.68%
Div. Yield1.2%2.52%
Expense Ratio0.03%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 Europe Index Fund ETF Shares (VGK) is a Europe Stock fund that is issued by Vanguard. It currently has 25.7B total assets under management and has yielded an average annual return of 6.68% over the past 10 years. The fund has a dividend yield of 2.52% with an expense ratio of 0.08%.

ITOT’s dividend yield is 1.32% lower than that of VGK (1.2% vs. 2.52%). Also, ITOT yielded on average 7.91% more per year over the past decade (14.59% vs. 6.68%). The expense ratio of ITOT is 0.05 percentage points lower than VGK’s (0.03% vs. 0.08%).

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Fund Composition

Industry Exposure

ITOT vs. VGK - Industry Exposure

ITOTVGK
Technology24.49%8.3%
Industrials9.21%15.58%
Energy2.51%4.3%
Communication Services10.54%5.09%
Utilities2.35%3.89%
Healthcare13.59%13.76%
Consumer Defensive5.79%11.39%
Real Estate3.67%2.57%
Financial Services13.69%15.85%
Consumer Cyclical11.69%11.6%
Basic Materials2.47%7.67%

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 Europe Index Fund ETF Shares (VGK) has the most exposure to the Financial Services sector at 15.85%. This is followed by Industrials and Healthcare at 15.58% and 13.76% respectively. Utilities (3.89%), Energy (4.3%), and Communication Services (5.09%) only make up 13.28% of the fund’s total assets.

VGK’s mid-section with moderate exposure is comprised of Basic Materials, Technology, Consumer Defensive, Consumer Cyclical, and Healthcare stocks at 7.67%, 8.3%, 11.39%, 11.6%, and 13.76%.

ITOT is 16.19% more exposed to the Technology sector than VGK (24.49% vs 8.3%). ITOT’s exposure to Financial Services and Healthcare stocks is 2.16% lower and 0.17% lower respectively (13.69% vs. 15.85% and 13.59% vs. 13.76%). In total, Basic Materials, Energy, and Real Estate also make up 5.89% less of the fund’s holdings compared to VGK (8.65% vs. 14.54%).

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%.

VGK - Holdings

VGK HoldingsWeight
Nestle SA2.82%
ASML Holding NV2.2%
Roche Holding AG2.13%
LVMH Moet Hennessy Louis Vuitton SE1.58%
Novartis AG1.55%
AstraZeneca PLC1.27%
SAP SE1.25%
Unilever PLC1.23%
Novo Nordisk A/S B1.09%
Siemens AG0.96%

VGK’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 2.82%, 2.2%, 2.13%, 1.58%, and 1.55%.

AstraZeneca PLC (1.27%), SAP SE (1.25%), and Unilever PLC (1.23%) have a slightly smaller but still significant weight. Novo Nordisk A/S B and Siemens AG are also represented in the VGK’s holdings at 1.09% and 0.96%.

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Risk Analysis

ITOTVGK
Mean Return1.270.61
R-squared99.492.76
Std. Deviation14.0216.65
Alpha-0.540.45
Beta1.031.06
Sharpe Ratio1.040.4
Treynor Ratio14.135.12

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

The Vanguard FTSE Europe Index Fund ETF Shares (VGK) has a R-squared of 92.76 with a Mean Return of 0.61 and a Alpha of 0.45. Its Sharpe Ratio is 0.4 while VGK’s Standard Deviation is 16.65. Furthermore, the fund has a Treynor Ratio of 5.12 and a Beta of 1.06.

ITOT’s Mean Return is 0.66 points higher than that of VGK and its R-squared is 6.64 points higher. With a Standard Deviation of 14.02, ITOT is slightly less volatile than VGK. The Alpha and Beta of ITOT are 0.99 points lower and 0.03 points lower than VGK’s Alpha and Beta.

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Performance

Annual Returns

ITOT vs. VGK - Annual Returns

YearITOTVGK
202020.75%6.5%
201930.87%24.26%
2018-5.27%-14.79%
201721.23%27.06%
201612.59%-0.59%
20150.96%-1.87%
201413.01%-6.56%
201332.67%24.93%
201215.98%21.01%
20111.55%-11.49%
201016.15%5.01%

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 VGK, returning 27.06% on an annual basis. The poorest year for VGK in the last ten years was 2018, with a yield of -14.79%. Most years the Vanguard FTSE Europe Index Fund ETF Shares has given investors modest returns, such as in 2016, 2010, and 2020, when gains were -0.59%, 5.01%, and 6.5% respectively.

Portfolio Growth

ITOT vs. VGK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ITOT$10,000$42,31014.59%
VGK$10,000$18,3506.68%

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 VGK, the end total would have been $18,350. This equates to a $8,350 profit over 11 years and a compound annual growth rate (CAGR) of 6.68%.

ITOT’s CAGR is 7.91 percentage points higher than that of VGK and as a result, would have yielded $23,960 more on a $10,000 investment. Thus, ITOT outperformed VGK by 7.91% annually.


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