The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Vanguard Health Care Index Fund ETF Shares (VHT) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and VHT is a Vanguard Health fund. So, what’s the difference between ITOT and VHT? And which fund is better?
The expense ratio of ITOT is 0.07 percentage points lower than VHT’s (0.03% vs. 0.1%). ITOT also has a higher exposure to the technology sector and a higher standard deviation. Overall, ITOT has provided lower returns than VHT over the past ten years.
In this article, we’ll compare ITOT vs. VHT. We’ll look at fund composition and industry exposure, as well as at their holdings and annual returns. Moreover, I’ll also discuss ITOT’s and VHT’s portfolio growth, performance, and risk metrics and examine how these affect their overall returns.
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Summary
| ITOT | VHT | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | Vanguard Health Care Index Fund ETF Shares |
| Category | Large Blend | Health |
| Issuer | iShares | Vanguard |
| AUM | 41.97B | 17.94B |
| Avg. Return | 14.59% | 16.04% |
| Div. Yield | 1.2% | 1.15% |
| Expense Ratio | 0.03% | 0.1% |
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 Health Care Index Fund ETF Shares (VHT) is a Health fund that is issued by Vanguard. It currently has 17.94B total assets under management and has yielded an average annual return of 16.04% over the past 10 years. The fund has a dividend yield of 1.15% with an expense ratio of 0.1%.
ITOT’s dividend yield is 0.05% higher than that of VHT (1.2% vs. 1.15%). Also, ITOT yielded on average 1.45% less per year over the past decade (14.59% vs. 16.04%). The expense ratio of ITOT is 0.07 percentage points lower than VHT’s (0.03% vs. 0.1%).
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Fund Composition
Industry Exposure
| ITOT | VHT | |
| Technology | 24.49% | 0.05% |
| Industrials | 9.21% | 0.05% |
| Energy | 2.51% | 0.0% |
| Communication Services | 10.54% | 0.0% |
| Utilities | 2.35% | 0.0% |
| Healthcare | 13.59% | 99.57% |
| Consumer Defensive | 5.79% | 0.0% |
| Real Estate | 3.67% | 0.0% |
| Financial Services | 13.69% | 0.02% |
| Consumer Cyclical | 11.69% | 0.0% |
| Basic Materials | 2.47% | 0.31% |
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 Health Care Index Fund ETF Shares (VHT) has the most exposure to the Healthcare sector at 99.57%. This is followed by Basic Materials and Technology at 0.31% and 0.05% respectively. Real Estate (0.0%), Consumer Defensive (0.0%), and Utilities (0.0%) only make up 0.00% of the fund’s total assets.
VHT’s mid-section with moderate exposure is comprised of Communication Services, Energy, Financial Services, Industrials, and Technology stocks at 0.0%, 0.0%, 0.02%, 0.05%, and 0.05%.
ITOT is 24.44% more exposed to the Technology sector than VHT (24.49% vs 0.05%). ITOT’s exposure to Financial Services and Healthcare stocks is 13.67% higher and 85.98% lower respectively (13.69% vs. 0.02% and 13.59% vs. 99.57%). In total, Basic Materials, Energy, and Real Estate also make up 8.34% more of the fund’s holdings compared to VHT (8.65% vs. 0.31%).
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%.
| VHT Holdings | Weight |
| Johnson & Johnson | 7.34% |
| UnitedHealth Group Inc | 6.44% |
| Pfizer Inc | 3.7% |
| Abbott Laboratories | 3.48% |
| Thermo Fisher Scientific Inc | 3.37% |
| AbbVie Inc | 3.37% |
| Merck & Co Inc | 3.33% |
| Eli Lilly and Co | 3.17% |
| Danaher Corp | 2.91% |
| Medtronic PLC | 2.83% |
VHT’s Top Holdings are Johnson & Johnson, UnitedHealth Group Inc, Pfizer Inc, Abbott Laboratories, and Thermo Fisher Scientific Inc at 7.34%, 6.44%, 3.7%, 3.48%, and 3.37%.
AbbVie Inc (3.37%), Merck & Co Inc (3.33%), and Eli Lilly and Co (3.17%) have a slightly smaller but still significant weight. Danaher Corp and Medtronic PLC are also represented in the VHT’s holdings at 2.91% and 2.83%.
Risk Analysis
| ITOT | VHT | |
| Mean Return | 1.27 | 1.33 |
| R-squared | 99.4 | 59.86 |
| Std. Deviation | 14.02 | 13.58 |
| Alpha | -0.54 | 7.99 |
| Beta | 1.03 | 0.75 |
| Sharpe Ratio | 1.04 | 1.13 |
| Treynor Ratio | 14.13 | 20.74 |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Treynor Ratio of 14.13 with a Standard Deviation of 14.02 and a Beta of 1.03. Its Mean Return is 1.27 while ITOT’s Alpha is -0.54. Furthermore, the fund has a Sharpe Ratio of 1.04 and a R-squared of 99.4.
The Vanguard Health Care Index Fund ETF Shares (VHT) has a Sharpe Ratio of 1.13 with a Alpha of 7.99 and a Treynor Ratio of 20.74. Its Standard Deviation is 13.58 while VHT’s Beta is 0.75. Furthermore, the fund has a Mean Return of 1.33 and a R-squared of 59.86.
ITOT’s Mean Return is 0.06 points lower than that of VHT and its R-squared is 39.54 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than VHT. The Alpha and Beta of ITOT are 8.53 points lower and 0.28 points higher than VHT’s Alpha and Beta.
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Performance
Annual Returns
| Year | ITOT | VHT |
| 2020 | 20.75% | 18.21% |
| 2019 | 30.87% | 21.97% |
| 2018 | -5.27% | 5.55% |
| 2017 | 21.23% | 23.34% |
| 2016 | 12.59% | -3.33% |
| 2015 | 0.96% | 7.22% |
| 2014 | 13.01% | 25.38% |
| 2013 | 32.67% | 42.67% |
| 2012 | 15.98% | 19.1% |
| 2011 | 1.55% | 10.57% |
| 2010 | 16.15% | 5.75% |
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 VHT, returning 42.67% on an annual basis. The poorest year for VHT in the last ten years was 2016, with a yield of -3.33%. Most years the Vanguard Health Care Index Fund ETF Shares has given investors modest returns, such as in 2011, 2020, and 2012, when gains were 10.57%, 18.21%, and 19.1% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $42,310 | 14.59% |
| VHT | $10,000 | $48,464 | 16.04% |
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 VHT, the end total would have been $48,464. This equates to a $38,464 profit over 11 years and a compound annual growth rate (CAGR) of 16.04%.
ITOT’s CAGR is 1.45 percentage points lower than that of VHT and as a result, would have yielded $6,154 less on a $10,000 investment. Thus, ITOT performed worse than VHT by 1.45% annually.
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