The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and ITOT is a iShares Large Blend fund. So, what’s the difference between VO and ITOT? And which fund is better?
The expense ratio of VO is 0.01 percentage points higher than ITOT’s (0.04% vs. 0.03%). VO also has a lower exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than ITOT over the past ten years.
In this article, we’ll compare VO vs. ITOT. We’ll look at performance and fund composition, as well as at their portfolio growth and industry exposure. Moreover, I’ll also discuss VO’s and ITOT’s annual returns, risk metrics, and holdings and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||iShares Core S&P Total U.S. Stock Market ETF|
|Category||Mid-Cap Blend||Large Blend|
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
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%.
VO’s dividend yield is 0.03% higher than that of ITOT (1.23% vs. 1.2%). Also, VO yielded on average 0.25% less per year over the past decade (14.34% vs. 14.59%). The expense ratio of VO is 0.01 percentage points higher than ITOT’s (0.04% vs. 0.03%).
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
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%.
VO is 2.48% less exposed to the Technology sector than ITOT (22.01% vs 24.49%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.56% lower and 0.43% higher respectively (13.03% vs. 13.59% and 12.12% vs. 11.69%). In total, Basic Materials, Energy, and Utilities also make up 4.97% more of the fund’s holdings compared to ITOT (12.30% vs. 7.33%).
|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
|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 Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Mean Return of 1.14 and a Standard Deviation of 15.65. Its Beta is 1.11 while VO’s Treynor Ratio is 11.32. Furthermore, the fund has a Sharpe Ratio of 0.83 and a Alpha of -2.71.
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a R-squared of 99.4 with a Treynor Ratio of 14.13 and a Sharpe Ratio of 1.04. Its Alpha is -0.54 while ITOT’s Standard Deviation is 14.02. Furthermore, the fund has a Beta of 1.03 and a Mean Return of 1.27.
VO’s Mean Return is 0.13 points lower than that of ITOT and its R-squared is 7.18 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than ITOT. The Alpha and Beta of VO are 2.17 points lower and 0.08 points higher than ITOT’s Alpha and Beta.
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VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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 VO would have resulted in a final balance of $40,404. This is a profit of $30,404 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
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%.
VO’s CAGR is 0.25 percentage points lower than that of ITOT and as a result, would have yielded $1,906 less on a $10,000 investment. Thus, VO performed worse than ITOT by 0.25% annually.
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