ITOT Vs. VTI - Which Fund Do You Prefer? (2024)

ITOT vs. VTI are two very popular Exchange-Traded Funds (ETFs) in the US capital market. Let’s look into two ETFs that may very well help your investment strategy moving forward.

ITOT is a creation of iShares, while VTI is a creation of Vanguard. Both iShares and Vanguard are successful asset management firms with a track record. Only a few other firms can rival the US securities market.

While ITOT tracks stocks in the S&P Total Market Index, VTI focuses on the CSRP Total US Market Index. Despite coming from different issuers, they have the same expense ratios of 0.03%. Their low expense ratios are one of the reasons why many investors prefer them to others with much higher ratios.

It is also important to note that ITOT and VTI are highly diversified ETFs. Investors prefer diversified assets because they tend to be less volatile. The more diversified investment is, the less it will be affected by price fluctuations of a few stocks in its holdings.

So without further ado, let’s review ITOT vs. VTI to give you a fair idea of how both ETFs compare with each other. At the end of the review, the choice will be yours to decide which one you prefer.

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ITOT or iShares Core S&P Total US Stock Market ETF is an ETF issued by iShares. Since it was launched in the US in 2004, it has remained the second most popular ETF after VTI by Vanguard. ITOT seeks to track high-performance stocks in the US S&P 500 market index, and it has a net asset value of $46.71 billion.

The asset-class that it tracks corresponds with the performance and yield of the index. ITOT is passively managed, and the expense ratio is relatively low at 0.03%. Also, ITOT seeks to invest about 90% of its assets into S&P stocks.

If you did a quick rundown of all the stocks held under ITOT, you would notice that they are primarily common stocks listed on the NASDAQ Select Market, NASDAQ Capital Market, Cboe, and the NYSE.

Managers also seek to invest the remaining assets on swap contracts, futures and options, and other cash equivalents that will yield income. ITOT is quite popular among long-term investors who also want to earn dividends from their investments while enjoying value accumulation at the same time.

Let’s review ITOT’s top ten holdings in the table below:

VTI: Vanguard Total Stock Market ETF

Vanguard is the largest portfolio manager in the US, and their securities tend to do quite well in the market. One of their most successful creations is VTI or Vanguard Total Stock Market ETF. VTI is an ETF launched in 2001.

The fund tracks stocks in the CRSP US Total Market Index. VTI is one of the biggest ETFs in the world based on asset net worth. The fund’s net asset is worth $1.26 trillion in assets covering a total of roughly 4,136 different stocks.

VTI is highly protected from risks posed by a few industries because its holdings are spread across so many industries that one or a few industries will not affect the fund significantly.

VTI is designed to track the CRSP benchmark index while also measuring the returns of investment of the overall market. By employing an indexing approach, about 80% of its net worth is invested into common stock in the index.

VTI has an expense ratio of 0.03% and is a highly liquid ETF traded on many global platforms.

Let’s review VTI’s top ten holdings in the table below:

ITOT Vs. VTI: Key Differences

There isn’t much to differentiate ITOT from VTI. Some finance experts will argue that their differences are largely a matter of technicality than anything else.

ITOT and VTI are ETFs with the same expense ratio of 0.03%. Furthermore, they track and invest in similar stocks and companies. However, there are a few differences.

To begin with, VTI is three years older than ITOT since it was launched in 2001 before ITOT in 2004. Also, they were created by different companies. ITOT was created by iShares, while Vanguard created VTI.

But their major difference lies in the index that they track. ITOT tracks large-cap stocks in the S&P 500 US Stock Market Index, while VTI tracks CRSP Total Market Index stocks.

Besides the difference in the index, there isn’t much to differentiate between ITOT and VTI.

ITOT Vs. VTI: Composition Differences

To better understand their similarities and differences, let’s review their composition makeup.

ITOT Vs. VTI: Performance Differences

How do they stack up against each other in terms of performance? Let’s have a look.

ITOT Performance & Returns

VTI Performance & Returns

ITOT Vs. VTI: Fees

ITOT vs. VTI have the same fees. If you choose to invest in one or the other, you will be liable to pay an expense fee of 0.03%.

The low fee is a far cry from what used to be the case in the past. Before, fees used to be quite high, which was a turn-off for many people with little financial resources.

But over time, the market has been liberalized to provide small investors with access to the market without paying too much management fees by tracking indexes. It takes less work and thus it’s perfectly reasonable to charge a smaller fee.

ITOT Vs. VTI: Frequently Asked Questions

Here are some questions to help you better understand ITOT and VTI.

Which Is Better, ITOT or VTI?

The fund you invest in is a matter of choice. ITOT and VTI have the same expense ratios (0.03%) and are very liquid. Meaning you can exchange them for cash at short notice.

However, VTI has always outperformed ITOT historically because it tracks small and mid-cap stocks that have a slightly higher return historically. Besides VTI’s slight performance edge, they are largely the same in other aspects.

Is ITOT A Good ETF?

Yes, it is, and the data proves just that. It is very low-cost and holds stocks that cover several industries. Moreover, some of the individual stocks it holds are highly profitable ones that are stable and it moves with the market expectations. It is a highly diversified fund.

Does ITOT Pay A Dividend?

Yes, ITOT pays dividends. The dividend per share is 1.20%.

ITOT Vs. VTI: Which Fund Do You Prefer?

Now that we have understood these managed funds, which one should you choose to diversify your portfolio? The answer actually lies with you. Both ETFs have their own pros and cons but both can help boost your income. It all depends on where you are currently in your financial journey.

Once you understand what your financial capacity is and you know what your investment goals are, then you can align this to what ITOT or VTI has to offer.

Both can provide you with the additional passive income you need despite the volatility of the market. So long as it is aligned with your goals based on your due diligence, it will help you move one step closer to financial freedom.

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