VTI vs. ITOT: A Comparative Study

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The iShares Core S&P Total US Stock Market ETF (ITOT +0.32%) and the Vanguard Total Stock Market ETF (VTI +0.31%) stand as twin beacons in the realm of U.S. equity, offering low-cost, diversified exposure with a grace that belies their mechanical precision. Yet, as one might expect in a society where subtleties reign, their differences-though minor-deserve scrutiny.

To discern which might suit the discerning investor, we must examine their cost, diversification, sector leanings, and risk profiles, for even in the world of finance, the smallest distinctions can hold great significance.

Snapshot (cost & size)

Metric ITOT VTI
Issuer iShares Vanguard
Expense ratio 0.03% 0.03%
1-yr return (as of Jan. 3, 2025) 14.69% 14.76%
Dividend yield 1.09% 1.11%
Beta (5Y monthly) 1.04 1.04
AUM $80 billion $567 billion

These two funds, though differing in many respects, share an admirable equality in their expense ratios, a trait that would surely please the most frugal investor. Their dividend yields, too, are closely aligned, a testament to their shared commitment to rewarding shareholders with a modest yet consistent hand.

Performance & risk comparison

Metric ITOT VTI
Max drawdown (5 y) -25.35% -25.36%
Growth of $1,000 over 5 years $1,730 $1,728

What’s inside

VTI, tracking the CRSP US Total Market Index, encompasses 3,527 stocks, a number that speaks to its ambition to capture the full breadth of the market. Its largest sector, technology, commands 35% of assets, followed by financial services at 13% and consumer cyclical at 11%. The top holdings-Apple, Nvidia, and Microsoft-are as familiar as old acquaintances, their presence a quiet assurance of stability.

ITOT, though slightly less expansive with 2,498 holdings, offers a similar tapestry of U.S. equities. Its sector allocation mirrors VTI’s, save for a marginal difference in technology’s share. Both funds, in their unassuming manner, eschew leverage, currency hedging, and ESG screens, adhering to a philosophy of simplicity and universality.

For those seeking further enlightenment on ETFs, the full guide remains a resource of considerable merit.

What this means for investors

VTI and ITOT, though rooted in the same principles, diverge in their scale and scope. VTI, with its larger assets under management and greater number of holdings, presents a case for those who value breadth and liquidity. Yet, for the average investor, such distinctions may prove as inconsequential as the difference between two well-matched suitors.

While VTI’s slightly higher dividend yield and broader diversification might tip the scales for some, the differences are so minute as to warrant little concern. Performance, too, remains remarkably aligned, with both funds exhibiting near-identical risk profiles and returns.

In essence, the choice between these two funds hinges on the investor’s preference for quantity over quality-or rather, the illusion of it. For those who prize liquidity and comprehensiveness, VTI holds the advantage; for others, the distinction may be as fleeting as a whisper in the wind.

Glossary

ETF: An exchange-traded fund, a vessel for a basket of securities, trading with the ease of a stock.
Expense ratio: The annual fee, a percentage of investment, reflecting the fund’s operational costs.
Diversified U.S. equity exposure: A strategy of spreading investments across many stocks to temper risk.
Dividend yield: The annual dividends, expressed as a percentage of the fund’s share price.
Beta: A measure of volatility, comparing an investment’s movements to the market at large.
AUM (assets under management): The total value of assets a fund oversees, a mark of its stature.
Max drawdown: The greatest decline from peak to trough, a measure of historical loss.
Total return: The sum of price changes and reinvested dividends, a comprehensive indicator.
Sector allocation: The distribution of holdings across industries, reflecting the fund’s priorities.
Leverage (in funds): The use of borrowed capital to amplify exposure, a practice both daring and perilous.
Currency hedging: A strategy to mitigate the effects of exchange rate fluctuations.
ESG screens: Criteria used to exclude or include investments based on ethical considerations.

With such knowledge, the investor may proceed with the confidence of one who has weighed all considerations, and perhaps, a touch of curiosity for the unknown.

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2026-01-04 14:07