The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between ITOT and VTIP? And which fund is better?
The expense ratio of ITOT is 0.02 percentage points lower than VTIP’s (0.03% vs. 0.05%). ITOT also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, ITOT has provided higher returns than VTIP over the past ten years.
In this article, we’ll compare ITOT vs. VTIP. We’ll look at portfolio growth and annual returns, as well as at their holdings and industry exposure. Moreover, I’ll also discuss ITOT’s and VTIP’s risk metrics, fund composition, and performance and examine how these affect their overall returns.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
Summary
| ITOT | VTIP | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Large Blend | Inflation-Protected Bond |
| Issuer | iShares | Vanguard |
| AUM | 41.97B | 50.67B |
| Avg. Return | 14.59% | 1.79% |
| Div. Yield | 1.2% | 1.35% |
| Expense Ratio | 0.03% | 0.05% |
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 Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
ITOT’s dividend yield is 0.15% lower than that of VTIP (1.2% vs. 1.35%). Also, ITOT yielded on average 12.80% more per year over the past decade (14.59% vs. 1.79%). The expense ratio of ITOT is 0.02 percentage points lower than VTIP’s (0.03% vs. 0.05%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
Fund Composition
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
Risk Analysis
| ITOT | VTIP | |
| Mean Return | 1.27 | 0 |
| R-squared | 99.4 | 0 |
| Std. Deviation | 14.02 | 0 |
| Alpha | -0.54 | 0 |
| Beta | 1.03 | 0 |
| Sharpe Ratio | 1.04 | 0 |
| Treynor Ratio | 14.13 | 0 |
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 Sharpe Ratio of 1.04. Its Standard Deviation is 14.02 while ITOT’s Beta is 1.03. Furthermore, the fund has a Alpha of -0.54 and a R-squared of 99.4.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Beta of 0 with a Treynor Ratio of 0 and a Standard Deviation of 0. Its Alpha is 0 while VTIP’s R-squared is 0. Furthermore, the fund has a Mean Return of 0 and a Sharpe Ratio of 0.
ITOT’s Mean Return is 1.27 points higher than that of VTIP and its R-squared is 99.40 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than VTIP. The Alpha and Beta of ITOT are 0.54 points lower and 1.03 points higher than VTIP’s Alpha and Beta.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
Performance
Annual Returns
| Year | ITOT | VTIP |
| 2020 | 20.75% | 4.97% |
| 2019 | 30.87% | 4.83% |
| 2018 | -5.27% | 0.54% |
| 2017 | 21.23% | 0.82% |
| 2016 | 12.59% | 2.71% |
| 2015 | 0.96% | -0.15% |
| 2014 | 13.01% | -1.17% |
| 2013 | 32.67% | -1.55% |
| 2012 | 15.98% | 0.0% |
| 2011 | 1.55% | 0.0% |
| 2010 | 16.15% | 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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ITOT | $10,000 | $23,312 | 14.59% |
| VTIP | $10,000 | $11,305 | 1.79% |
A $10,000 investment in ITOT would have resulted in a final balance of $23,312. This is a profit of $13,312 over 7 years and amounts to a compound annual growth rate (CAGR) of 14.59%.
With a $10,000 investment in VTIP, the end total would have been $11,305. This equates to a $1,305 profit over 7 years and a compound annual growth rate (CAGR) of 1.79%.
ITOT’s CAGR is 12.80 percentage points higher than that of VTIP and as a result, would have yielded $12,007 more on a $10,000 investment. Thus, ITOT outperformed VTIP by 12.80% 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.
