The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. VEA is a Vanguard Foreign Large Blend fund and ITOT is a iShares Large Blend fund. So, what’s the difference between VEA and ITOT? And which fund is better?
The expense ratio of VEA is 0.02 percentage points higher than ITOT’s (0.05% vs. 0.03%). VEA also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEA has provided lower returns than ITOT over the past ten years.
In this article, we’ll compare VEA vs. ITOT. We’ll look at annual returns and holdings, as well as at their risk metrics and performance. Moreover, I’ll also discuss VEA’s and ITOT’s industry exposure, portfolio growth, and fund composition and examine how these affect their overall returns.
Summary
| VEA | ITOT | |
| Name | Vanguard FTSE Developed Markets Index Fund ETF Shares | iShares Core S&P Total U.S. Stock Market ETF |
| Category | Foreign Large Blend | Large Blend |
| Issuer | Vanguard | iShares |
| AUM | 157.48B | 41.97B |
| Avg. Return | 7.05% | 14.59% |
| Div. Yield | 2.49% | 1.2% |
| Expense Ratio | 0.05% | 0.03% |
The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 157.48B total assets under management and has yielded an average annual return of 7.05% over the past 10 years. The fund has a dividend yield of 2.49% 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%.
VEA’s dividend yield is 1.29% higher than that of ITOT (2.49% vs. 1.2%). Also, VEA yielded on average 7.54% less per year over the past decade (7.05% vs. 14.59%). The expense ratio of VEA is 0.02 percentage points higher than ITOT’s (0.05% vs. 0.03%).
Fund Composition
Industry Exposure
| VEA | ITOT | |
| Technology | 11.67% | 24.49% |
| Industrials | 15.47% | 9.21% |
| Energy | 4.17% | 2.51% |
| Communication Services | 5.41% | 10.54% |
| Utilities | 3.1% | 2.35% |
| Healthcare | 10.6% | 13.59% |
| Consumer Defensive | 8.61% | 5.79% |
| Real Estate | 4.04% | 3.67% |
| Financial Services | 17.39% | 13.69% |
| Consumer Cyclical | 11.31% | 11.69% |
| Basic Materials | 8.24% | 2.47% |
The Vanguard FTSE Developed Markets Index Fund ETF Shares (VEA) has the most exposure to the Financial Services sector at 17.39%. This is followed by Industrials and Technology at 15.47% and 11.67% respectively. Real Estate (4.04%), Energy (4.17%), and Communication Services (5.41%) only make up 13.62% of the fund’s total assets.
VEA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Consumer Cyclical, and Technology stocks at 8.24%, 8.61%, 10.6%, 11.31%, and 11.67%.
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%.
VEA is 3.70% more exposed to the Financial Services sector than ITOT (17.39% vs 13.69%). VEA’s exposure to Industrials and Technology stocks is 6.26% higher and 12.82% lower respectively (15.47% vs. 9.21% and 11.67% vs. 24.49%). In total, Real Estate, Energy, and Communication Services also make up 3.10% less of the fund’s holdings compared to ITOT (13.62% vs. 16.72%).
Holdings
| VEA Holdings | Weight |
| Nestle SA | 1.5% |
| Samsung Electronics Co Ltd | 1.4% |
| ASML Holding NV | 1.16% |
| Roche Holding AG | 1.1% |
| Toyota Motor Corp | 0.92% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.84% |
| Novartis AG | 0.82% |
| Shopify Inc A | 0.7% |
| AstraZeneca PLC | 0.67% |
| SAP SE | 0.66% |
VEA’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.5%, 1.4%, 1.16%, 1.1%, and 0.92%.
LVMH Moet Hennessy Louis Vuitton SE (0.84%), Novartis AG (0.82%), and Shopify Inc A (0.7%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the VEA’s holdings at 0.67% and 0.66%.
| 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%.
Performance
Annual Returns
| Year | VEA | ITOT |
| 2020 | 10.29% | 20.75% |
| 2019 | 22.08% | 30.87% |
| 2018 | -14.47% | -5.27% |
| 2017 | 26.44% | 21.23% |
| 2016 | 2.51% | 12.59% |
| 2015 | -0.21% | 0.96% |
| 2014 | -5.71% | 13.01% |
| 2013 | 22.12% | 32.67% |
| 2012 | 18.6% | 15.98% |
| 2011 | -12.57% | 1.55% |
| 2010 | 8.47% | 16.15% |
VEA had its best year in 2017 with an annual return of 26.44%. VEA’s worst year over the past decade yielded -14.47% and occurred in 2018. In most years the Vanguard FTSE Developed Markets Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.51%, 8.47%, and 10.29% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VEA | $10,000 | $19,290 | 7.05% |
| ITOT | $10,000 | $42,310 | 14.59% |
A $10,000 investment in VEA would have resulted in a final balance of $19,290. This is a profit of $9,290 over 11 years and amounts to a compound annual growth rate (CAGR) of 7.05%.
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%.
VEA’s CAGR is 7.54 percentage points lower than that of ITOT and as a result, would have yielded $23,020 less on a $10,000 investment. Thus, VEA performed worse than ITOT by 7.54% annually.
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