The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares S&P 500 Growth ETF (IVW) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and IVW is a iShares Large Growth fund. So, what’s the difference between VTI and IVW? And which fund is better?
The expense ratio of VTI is 0.15 percentage points lower than IVW’s (0.03% vs. 0.18%). VTI also has a lower exposure to the technology sector and a higher standard deviation. Overall, VTI has provided lower returns than IVW over the past ten years.
In this article, we’ll compare VTI vs. IVW. We’ll look at risk metrics and fund composition, as well as at their portfolio growth and performance. Moreover, I’ll also discuss VTI’s and IVW’s holdings, industry exposure, and annual returns and examine how these affect their overall returns.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
|Name||Vanguard Total Stock Market Index Fund ETF Shares||iShares S&P 500 Growth ETF|
|Category||Large Blend||Large Growth|
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 S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.
VTI’s dividend yield is 0.65% higher than that of IVW (1.26% vs. 0.61%). Also, VTI yielded on average 2.04% less per year over the past decade (14.70% vs. 16.74%). The expense ratio of VTI is 0.15 percentage points lower than IVW’s (0.03% vs. 0.18%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has the most exposure to the Technology sector at 24.1%. This is followed by Financial Services and Healthcare at 13.77% and 13.64% respectively. Basic Materials (2.44%), Energy (2.77%), and Real Estate (3.59%) only make up 8.80% of the fund’s total assets.
VTI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.77%, 9.39%, 10.4%, 11.83%, and 13.64%.
The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.
IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.
VTI is 13.70% less exposed to the Technology sector than IVW (24.1% vs 37.8%). VTI’s exposure to Financial Services and Healthcare stocks is 6.99% higher and 1.76% higher respectively (13.77% vs. 6.78% and 13.64% vs. 11.88%). In total, Basic Materials, Energy, and Real Estate also make up 5.98% more of the fund’s holdings compared to IVW (8.80% vs. 2.82%).
|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%.
|Facebook Inc Class A||4.28%|
|Alphabet Inc Class A||4.06%|
|Alphabet Inc Class C||3.86%|
|PayPal Holdings Inc||1.62%|
IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.
Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has a Standard Deviation of 14.15 with a Alpha of -0.57 and a Treynor Ratio of 13.58. Its Sharpe Ratio is 1 while VTI’s Beta is 1.04. Furthermore, the fund has a R-squared of 99.24 and a Mean Return of 1.23.
The iShares S&P 500 Growth ETF (IVW) has a Mean Return of 1.44 with a Beta of 0.98 and a R-squared of 93.82. Its Alpha is 2.19 while IVW’s Treynor Ratio is 17.24. Furthermore, the fund has a Sharpe Ratio of 1.21 and a Standard Deviation of 13.77.
VTI’s Mean Return is 0.21 points lower than that of IVW and its R-squared is 5.42 points higher. With a Standard Deviation of 14.15, VTI is slightly more volatile than IVW. The Alpha and Beta of VTI are 2.76 points lower and 0.06 points higher than IVW’s Alpha and Beta.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
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 2020 was the strongest year for IVW, returning 33.21% on an annual basis. The poorest year for IVW in the last ten years was 2018, with a yield of -0.17%. Most years the iShares S&P 500 Growth ETF has given investors modest returns, such as in 2012, 2014, and 2010, when gains were 14.39%, 14.67%, and 14.84% respectively.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VTI would have resulted in a final balance of $42,648. This is a profit of $32,648 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
With a $10,000 investment in IVW, the end total would have been $51,915. This equates to a $41,915 profit over 11 years and a compound annual growth rate (CAGR) of 16.74%.
VTI’s CAGR is 2.04 percentage points lower than that of IVW and as a result, would have yielded $9,267 less on a $10,000 investment. Thus, VTI performed worse than IVW by 2.04% annually.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.