The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares Core Total USD Bond Market ETF (IUSB) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and IUSB is a iShares N/A fund. So, what’s the difference between VTI and IUSB? And which fund is better?
The expense ratio of VTI is 0.03 percentage points lower than IUSB’s (0.03% vs. 0.06%). VTI also has a high exposure to the technology sector while IUSB is mostly comprised of AAA bonds. Overall, VTI has provided higher returns than IUSB over the past ten years.
In this article, we’ll compare VTI vs. IUSB. We’ll look at annual returns and holdings, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss VTI’s and IUSB’s performance, portfolio growth, and industry exposure and examine how these affect their overall returns.
|Name||Vanguard Total Stock Market Index Fund ETF Shares||iShares Core Total USD Bond Market ETF|
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.
The iShares Core Total USD Bond Market ETF (IUSB) is a N/A fund that is issued by iShares. It currently has 14.49B total assets under management and has yielded an average annual return of 4.13% over the past 10 years. The fund has a dividend yield of 2.1% with an expense ratio of 0.06%.
VTI’s dividend yield is 0.84% lower than that of IUSB (1.26% vs. 2.1%). Also, VTI yielded on average 10.57% more per year over the past decade (14.70% vs. 4.13%). The expense ratio of VTI is 0.03 percentage points lower than IUSB’s (0.03% vs. 0.06%).
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|Facebook Inc Class A||1.88%|
|Alphabet Inc Class A||1.66%|
|Alphabet Inc Class C||1.56%|
|Berkshire Hathaway Inc Class B||1.09%|
|JPMorgan Chase & Co||1.06%|
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
|IUSB Bond Sectors||Weight|
IUSB’s Top Bond Sectors are ratings of AAA, BBB, A, BB, and AA at 58.32%, 16.98%, 12.27%, 4.33%, and 3.36%. The fund is less weighted towards B (2.8%), Others (1.01%), and Below B (0.92%) rated bonds.
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VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% respectively.
The year 2019 was the strongest year for IUSB, returning 9.26% on an annual basis. The poorest year for IUSB in the last ten years was 2018, with a yield of -0.38%. Most years the iShares Core Total USD Bond Market ETF has given investors modest returns, such as in 2011, 2010, and 2015, when gains were 0.0%, 0.0%, and 0.46% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VTI would have resulted in a final balance of $20,572. This is a profit of $10,572 over 6 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
With a $10,000 investment in IUSB, the end total would have been $12,704. This equates to a $2,704 profit over 6 years and a compound annual growth rate (CAGR) of 4.13%.
VTI’s CAGR is 10.57 percentage points higher than that of IUSB and as a result, would have yielded $7,868 more on a $10,000 investment. Thus, VTI outperformed IUSB by 10.57% annually.
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