IWM vs. ITOT: What’s The Difference?

The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and ITOT is a iShares Large Blend fund. So, what’s the difference between IWM and ITOT? And which fund is better?

The expense ratio of IWM is 0.16 percentage points higher than ITOT’s (0.19% vs. 0.03%). IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided lower returns than ITOT over the past ten years.

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

Summary

IWM ITOT
Name iShares Russell 2000 ETF iShares Core S&P Total U.S. Stock Market ETF
Category Small Blend Large Blend
Issuer iShares iShares
AUM 66.48B 41.97B
Avg. Return 13.52% 14.59%
Div. Yield 0.86% 1.2%
Expense Ratio 0.19% 0.03%

The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% with an expense ratio of 0.19%.

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%.

IWM’s dividend yield is 0.34% lower than that of ITOT (0.86% vs. 1.2%). Also, IWM yielded on average 1.07% less per year over the past decade (13.52% vs. 14.59%). The expense ratio of IWM is 0.16 percentage points higher than ITOT’s (0.19% vs. 0.03%).

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Fund Composition

Industry Exposure

IWM vs. ITOT - Industry Exposure

IWM ITOT
Technology 14.21% 24.49%
Industrials 14.78% 9.21%
Energy 3.74% 2.51%
Communication Services 3.79% 10.54%
Utilities 2.44% 2.35%
Healthcare 20.3% 13.59%
Consumer Defensive 3.65% 5.79%
Real Estate 8.59% 3.67%
Financial Services 13.76% 13.69%
Consumer Cyclical 10.99% 11.69%
Basic Materials 3.74% 2.47%

The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.

IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.

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%.

IWM is 6.71% more exposed to the Healthcare sector than ITOT (20.3% vs 13.59%). IWM’s exposure to Industrials and Technology stocks is 5.57% higher and 10.28% lower respectively (14.78% vs. 9.21% and 14.21% vs. 24.49%). In total, Consumer Defensive, Basic Materials, and Energy also make up 0.36% more of the fund’s holdings compared to ITOT (11.13% vs. 10.77%).

Holdings

IWM - Holdings

IWM Holdings Weight
AMC Entertainment Holdings Inc Class A 0.52%
Intellia Therapeutics Inc 0.33%
Crocs Inc 0.3%
BlackRock Cash Funds Treasury SL Agency 0.29%
Tenet Healthcare Corp 0.26%
Lattice Semiconductor Corp 0.26%
Tetra Tech Inc 0.25%
II-VI Inc 0.25%
EastGroup Properties Inc 0.24%
Arrowhead Pharmaceuticals Inc 0.24%

IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.

Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.

ITOT - 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%.

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Risk Analysis

IWM ITOT
Mean Return 1.12 1.27
R-squared 77.73 99.4
Std. Deviation 18.87 14.02
Alpha -5.12 -0.54
Beta 1.23 1.03
Sharpe Ratio 0.68 1.04
Treynor Ratio 9.56 14.13

The iShares Russell 2000 ETF (IWM) has a Standard Deviation of 18.87 with a R-squared of 77.73 and a Mean Return of 1.12. Its Beta is 1.23 while IWM’s Alpha is -5.12. Furthermore, the fund has a Sharpe Ratio of 0.68 and a Treynor Ratio of 9.56.

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

IWM’s Mean Return is 0.15 points lower than that of ITOT and its R-squared is 21.67 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than ITOT. The Alpha and Beta of IWM are 4.58 points lower and 0.20 points higher than ITOT’s Alpha and Beta.

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Performance

Annual Returns

IWM vs. ITOT - Annual Returns

Year IWM ITOT
2020 19.89% 20.75%
2019 25.42% 30.87%
2018 -11.02% -5.27%
2017 14.66% 21.23%
2016 21.36% 12.59%
2015 -4.33% 0.96%
2014 4.94% 13.01%
2013 38.85% 32.67%
2012 16.39% 15.98%
2011 -4.19% 1.55%
2010 26.76% 16.15%

IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% respectively.

The year 2013 was the strongest year for ITOT, returning 32.67% on an annual basis. The poorest year for ITOT in the last ten years was 2018, with a yield of -5.27%. Most years the iShares Core S&P Total U.S. Stock Market ETF has given investors modest returns, such as in 2014, 2012, and 2010, when gains were 13.01%, 15.98%, and 16.15% respectively.

Portfolio Growth

IWM vs. ITOT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWM $10,000 $36,686 13.52%
ITOT $10,000 $42,310 14.59%

A $10,000 investment in IWM would have resulted in a final balance of $36,686. This is a profit of $26,686 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.52%.

With a $10,000 investment in ITOT, the end total would have been $42,310. This equates to a $32,310 profit over 11 years and a compound annual growth rate (CAGR) of 14.59%.

IWM’s CAGR is 1.07 percentage points lower than that of ITOT and as a result, would have yielded $5,624 less on a $10,000 investment. Thus, IWM performed worse than ITOT by 1.07% annually.


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