The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the iShares Russell 1000 ETF (IWB) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and IWB is a iShares Large Blend fund. So, what’s the difference between VTI and IWB? And which fund is better?
The expense ratio of VTI is 0.12 percentage points lower than IWB’s (0.03% vs. 0.15%). VTI also has a lower exposure to the technology sector and a higher standard deviation. Overall, VTI has provided higher returns than IWB over the past ten years.
In this article, we’ll compare VTI vs. IWB. We’ll look at risk metrics and annual returns, as well as at their fund composition and holdings. Moreover, I’ll also discuss VTI’s and IWB’s industry exposure, portfolio growth, and performance and examine how these affect their overall returns.
|Name||Vanguard Total Stock Market Index Fund ETF Shares||iShares Russell 1000 ETF|
|Category||Large Blend||Large Blend|
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 Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.
VTI’s dividend yield is 0.12% higher than that of IWB (1.26% vs. 1.14%). Also, VTI yielded on average 0.06% more per year over the past decade (14.70% vs. 14.64%). The expense ratio of VTI is 0.12 percentage points lower than IWB’s (0.03% vs. 0.15%).
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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 Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.
IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.
VTI is 1.23% less exposed to the Technology sector than IWB (24.1% vs 25.33%). VTI’s exposure to Financial Services and Healthcare stocks is 0.13% higher and 0.29% higher respectively (13.77% vs. 13.64% and 13.64% vs. 13.35%). In total, Basic Materials, Energy, and Real Estate also make up 1.00% more of the fund’s holdings compared to IWB (8.80% vs. 7.80%).
|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||2.03%|
|Alphabet Inc Class A||1.93%|
|Alphabet Inc Class C||1.82%|
|Berkshire Hathaway Inc Class B||1.24%|
|JPMorgan Chase & Co||1.09%|
IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.
Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.
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The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has a Alpha of -0.57 with a Sharpe Ratio of 1 and a Beta of 1.04. Its R-squared is 99.24 while VTI’s Mean Return is 1.23. Furthermore, the fund has a Treynor Ratio of 13.58 and a Standard Deviation of 14.15.
The iShares Russell 1000 ETF (IWB) has a Alpha of -0.38 with a Mean Return of 1.27 and a Beta of 1.02. Its Sharpe Ratio is 1.05 while IWB’s Standard Deviation is 13.87. Furthermore, the fund has a R-squared of 99.73 and a Treynor Ratio of 14.31.
VTI’s Mean Return is 0.04 points lower than that of IWB and its R-squared is 0.49 points lower. With a Standard Deviation of 14.15, VTI is slightly more volatile than IWB. The Alpha and Beta of VTI are 0.19 points lower and 0.02 points higher than IWB’s Alpha and Beta.
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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 2013 was the strongest year for IWB, returning 32.93% on an annual basis. The poorest year for IWB in the last ten years was 2018, with a yield of -4.91%. Most years the iShares Russell 1000 ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 13.08%, 15.94%, and 16.27% 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 IWB, the end total would have been $42,462. This equates to a $32,462 profit over 11 years and a compound annual growth rate (CAGR) of 14.64%.
VTI’s CAGR is 0.06 percentage points higher than that of IWB and as a result, would have yielded $186 more on a $10,000 investment. Thus, VTI outperformed IWB by 0.06% annually.
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