ITOT vs. IVV: A Comprehensive Comparison
This article will compare two popular ETFs from iShares: the Core S&P Total U.S. Stock Market ETF (ITOT) and the Core S&P 500 ETF (IVV).
Both track indexes are related to the U.S. stock market but differ on a number of factors, including the range of holdings they cover and their expense ratios.
Expense Ratio Comparison: ITOT vs. IVV
Expense ratios play a critical role in an ETF’s performance over the long haul. These annual fees cover fund administration costs, and the less you pay, the more of the fund’s returns you keep. Both ITOT and IVV impress with an expense ratio of just 0.03%.
This low cost is one of the key reasons both funds are popular with investors. It allows you to keep the majority of your investment’s returns, helping you grow your wealth over time.
Dividend Yield Analysis: ITOT vs. IVV
Dividend yield is another crucial aspect when choosing between ITOT and IVV, as it directly impacts your income from the investment.
ITOT has a dividend yield of 1.3%, while IVV yields 1.5%. Although this difference may appear small, it could noticeably impact your income over a longer investment period.
Researching ETFs is a time-consuming process and requires a lot of knowledge to ensure you make the best decisions for your money. If you want to accelerate your learning curve in finance and investing, you can join the HaiKhuu Trading Community.
HaiKhuu offers live trading calls, daily morning reports, and an awesome community of like-minded traders to learn from.
Holdings Comparison: ITOT vs. IVV
The range of holdings is a significant factor differentiating ITOT from IVV. ITOT provides exposure to the entire U.S. stock market - from large-cap companies to smaller, up-and-coming firms. Specifically, ITOT tracks the S&P Total Market Index, essentially giving you access to over 2,500 U.S. stocks.
On the other hand, IVV offers exposure only to large-cap companies. Tracking the S&P 500 index, it includes around 500 of the largest U.S. companies spanning a variety of sectors and industries.
Performance Comparison: ITOT vs. IVV
Performance-wise, both ITOT and IVV have historically provided solid returns, largely tracking the performance of the U.S. stock market. However, their different holdings mean that one may outperform the other, depending on specific market conditions.
For example, in a bull market where smaller, high-growth companies shine, ITOT could potentially deliver greater returns thanks to its exposure to smaller-cap stocks.
On the other hand, in more cautious markets, the established, large-cap stocks that IVV tracks might stand strong, narrowing the performance gap.
Which is Better for You: ITOT or IVV?
The choice between ITOT and IVV depends primarily on your personal investment goals and risk tolerance. If you want exposure to the entirety of the U.S. stock market, including small and mid-cap companies, you might prefer ITOT.
However, if you wish to focus on the more stable large-cap market sector, IVV may be a better fit.
Conclusion: Making an Informed Decision between ITOT and IVV
Both ITOT and IVV are powerful tools for diversification, offering bundled access to vast ranges of the U.S. market. However, they are not one-size-fits-all solutions.
Carefully consider their diversification, expense ratios, dividend yields, and your personal financial goals and risk tolerance before making a decision.
If you want a better broker, the official brokerage of HaiKhuu Trading is tastytrade!
FAQ
What is the Vanguard equivalent of ITOT?
The closest Vanguard equivalent to ITOT is the Vanguard Total Stock Market ETF (VTI). Like ITOT, VTI provides broad exposure to the total U.S. stock market, including small-, medium-, and large-cap stocks.
Is IVV a good long term investment?
IVV can indeed be a good long-term investment, given it provides diversified exposure to large-cap U.S. stocks. It essentially allows you to invest in 500 of the largest U.S. companies in one go, spreading risk across various sectors. As always, though, it’s essential to keep in mind your personal investment horizon, risk tolerance, and financial goals.
