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ITOT vs. VYM: What’s The Difference?

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

The expense ratio of ITOT is 0.03 percentage points lower than VYM’s (0.03% vs. 0.06%). ITOT also has a higher exposure to the technology sector and a higher standard deviation. Overall, ITOT has provided higher returns than VYM over the past ten years.

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

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Summary

ITOTVYM
NameiShares Core S&P Total U.S. Stock Market ETFVanguard High Dividend Yield Index Fund ETF Shares
CategoryLarge BlendLarge Value
IssueriSharesVanguard
AUM41.97B48.5B
Avg. Return14.59%12.20%
Div. Yield1.2%2.79%
Expense Ratio0.03%0.06%

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 High Dividend Yield Index Fund ETF Shares (VYM) is a Large Value fund that is issued by Vanguard. It currently has 48.5B total assets under management and has yielded an average annual return of 12.20% over the past 10 years. The fund has a dividend yield of 2.79% with an expense ratio of 0.06%.

ITOT’s dividend yield is 1.59% lower than that of VYM (1.2% vs. 2.79%). Also, ITOT yielded on average 2.39% more per year over the past decade (14.59% vs. 12.20%). The expense ratio of ITOT is 0.03 percentage points lower than VYM’s (0.03% vs. 0.06%).

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Fund Composition

Industry Exposure

ITOT vs. VYM - Industry Exposure

ITOTVYM
Technology24.49%9.77%
Industrials9.21%10.14%
Energy2.51%7.12%
Communication Services10.54%5.91%
Utilities2.35%7.27%
Healthcare13.59%13.61%
Consumer Defensive5.79%14.13%
Real Estate3.67%0.02%
Financial Services13.69%22.05%
Consumer Cyclical11.69%5.57%
Basic Materials2.47%4.41%

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 High Dividend Yield Index Fund ETF Shares (VYM) has the most exposure to the Financial Services sector at 22.05%. This is followed by Consumer Defensive and Healthcare at 14.13% and 13.61% respectively. Basic Materials (4.41%), Consumer Cyclical (5.57%), and Communication Services (5.91%) only make up 15.89% of the fund’s total assets.

VYM’s mid-section with moderate exposure is comprised of Energy, Utilities, Technology, Industrials, and Healthcare stocks at 7.12%, 7.27%, 9.77%, 10.14%, and 13.61%.

ITOT is 14.72% more exposed to the Technology sector than VYM (24.49% vs 9.77%). ITOT’s exposure to Financial Services and Healthcare stocks is 8.36% lower and 0.02% lower respectively (13.69% vs. 22.05% and 13.59% vs. 13.61%). In total, Basic Materials, Energy, and Real Estate also make up 2.90% less of the fund’s holdings compared to VYM (8.65% vs. 11.55%).

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%.

VYM - Holdings

VYM HoldingsWeight
JPMorgan Chase & Co3.53%
Johnson & Johnson3.28%
The Home Depot Inc2.59%
Procter & Gamble Co2.48%
Bank of America Corp2.35%
Exxon Mobil Corp2.02%
Comcast Corp Class A1.96%
Verizon Communications Inc1.75%
Intel Corp1.71%
Cisco Systems Inc1.69%

VYM’s Top Holdings are JPMorgan Chase & Co, Johnson & Johnson, The Home Depot Inc, Procter & Gamble Co, and Bank of America Corp at 3.53%, 3.28%, 2.59%, 2.48%, and 2.35%.

Exxon Mobil Corp (2.02%), Comcast Corp Class A (1.96%), and Verizon Communications Inc (1.75%) have a slightly smaller but still significant weight. Intel Corp and Cisco Systems Inc are also represented in the VYM’s holdings at 1.71% and 1.69%.

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Risk Analysis

ITOTVYM
Mean Return1.271.04
R-squared99.488.88
Std. Deviation14.0212.69
Alpha-0.54-0.7
Beta1.030.88
Sharpe Ratio1.040.93
Treynor Ratio14.1313.24

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

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) has a R-squared of 88.88 with a Mean Return of 1.04 and a Treynor Ratio of 13.24. Its Standard Deviation is 12.69 while VYM’s Alpha is -0.7. Furthermore, the fund has a Beta of 0.88 and a Sharpe Ratio of 0.93.

ITOT’s Mean Return is 0.23 points higher than that of VYM and its R-squared is 10.52 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than VYM. The Alpha and Beta of ITOT are 0.16 points higher and 0.15 points higher than VYM’s Alpha and Beta.

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Performance

Annual Returns

ITOT vs. VYM - Annual Returns

YearITOTVYM
202020.75%1.14%
201930.87%24.2%
2018-5.27%-5.87%
201721.23%16.42%
201612.59%16.87%
20150.96%0.33%
201413.01%13.47%
201332.67%30.26%
201215.98%12.68%
20111.55%10.5%
201016.15%14.17%

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 VYM, returning 30.26% on an annual basis. The poorest year for VYM in the last ten years was 2018, with a yield of -5.87%. Most years the Vanguard High Dividend Yield Index Fund ETF Shares has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 12.68%, 13.47%, and 14.17% respectively.

Portfolio Growth

ITOT vs. VYM - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ITOT$10,000$42,31014.59%
VYM$10,000$33,91412.20%

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 VYM, the end total would have been $33,914. This equates to a $23,914 profit over 11 years and a compound annual growth rate (CAGR) of 12.20%.

ITOT’s CAGR is 2.39 percentage points higher than that of VYM and as a result, would have yielded $8,396 more on a $10,000 investment. Thus, ITOT outperformed VYM by 2.39% annually.


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