The Vanguard Small-Cap Index Fund ETF Shares (VB) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and ITOT is a iShares Large Blend fund. So, what’s the difference between VB and ITOT? And which fund is better?
The expense ratio of VB is 0.02 percentage points higher than ITOT’s (0.05% vs. 0.03%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided lower returns than ITOT over the past ten years.
In this article, we’ll compare VB vs. ITOT. We’ll look at performance and risk metrics, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VB’s and ITOT’s industry exposure, annual returns, and fund composition and examine how these affect their overall returns.
|Name||Vanguard Small-Cap Index Fund ETF Shares||iShares Core S&P Total U.S. Stock Market ETF|
|Category||Small Blend||Large Blend|
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 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%.
VB’s dividend yield is 0.06% lower than that of ITOT (1.14% vs. 1.2%). Also, VB yielded on average 0.34% less per year over the past decade (14.25% vs. 14.59%). The expense ratio of VB is 0.02 percentage points higher than ITOT’s (0.05% vs. 0.03%).
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
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%.
VB is 7.64% less exposed to the Technology sector than ITOT (16.85% vs 24.49%). VB’s exposure to Industrials and Healthcare stocks is 6.90% higher and 0.75% higher respectively (16.11% vs. 9.21% and 14.34% vs. 13.59%). In total, Communication Services, Energy, and Consumer Defensive also make up 8.63% less of the fund’s holdings compared to ITOT (10.21% vs. 18.84%).
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
|Facebook Inc Class A||1.89%|
|Alphabet Inc Class A||1.79%|
|Alphabet Inc Class C||1.71%|
|Berkshire Hathaway Inc Class B||1.17%|
|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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The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Treynor Ratio of 10.15 with a Standard Deviation of 17.82 and a Mean Return of 1.15. Its R-squared is 85.03 while VB’s Alpha is -4.02. Furthermore, the fund has a Sharpe Ratio of 0.74 and a Beta of 1.21.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a R-squared of 99.4 with a Standard Deviation of 14.02 and a Mean Return of 1.27. Its Treynor Ratio is 14.13 while ITOT’s Beta is 1.03. Furthermore, the fund has a Sharpe Ratio of 1.04 and a Alpha of -0.54.
VB’s Mean Return is 0.12 points lower than that of ITOT and its R-squared is 14.37 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than ITOT. The Alpha and Beta of VB are 3.48 points lower and 0.18 points higher than ITOT’s Alpha and Beta.
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VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
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%.
VB’s CAGR is 0.34 percentage points lower than that of ITOT and as a result, would have yielded $2,576 less on a $10,000 investment. Thus, VB performed worse than ITOT by 0.34% annually.
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