When building a low-cost, diversified portfolio using ETFs, many investors look to the iShares Core Series by BlackRock for reliable, efficient funds. Among the most popular are:
- IVV: iShares Core S&P 500 ETF
- ITOT: iShares Core S&P Total U.S. Stock Market ETF
- AGG: iShares Core U.S. Aggregate Bond ETF
These three ETFs cover key parts of the U.S. market and fixed income, but they serve different purposes. Understanding their differences is essential to creating a portfolio aligned with your investment goals.
Overview of Each ETF
IVV — iShares Core S&P 500 ETF
- Objective: Tracks the S&P 500 Index, representing the 500 largest U.S. companies.
- Exposure: Large-cap U.S. stocks across various sectors.
- Expense Ratio: Approximately 0.03%.
- Use: Core equity holding focusing on blue-chip, large-cap stocks with a history of stability and growth.
ITOT — iShares Core S&P Total U.S. Stock Market ETF
- Objective: Tracks the S&P Total Market Index, covering nearly 100% of the U.S. equity market.
- Exposure: Large, mid, small, and micro-cap stocks across all sectors.
- Expense Ratio: Approximately 0.03%.
- Use: Broader equity exposure than IVV, ideal for investors wanting the entire U.S. stock market in one fund.
AGG — iShares Core U.S. Aggregate Bond ETF
- Objective: Tracks the Bloomberg Barclays U.S. Aggregate Bond Index.
- Exposure: U.S. investment-grade bonds including Treasuries, mortgage-backed securities, corporate bonds, and asset-backed securities.
- Expense Ratio: Approximately 0.04%.
- Use: Core fixed income holding providing income and portfolio diversification.
Key Differences Explained
| Feature | IVV | ITOT | AGG |
|---|---|---|---|
| Asset Class | U.S. Large-Cap Stocks | U.S. Total Stock Market | U.S. Investment-Grade Bonds |
| Number of Holdings | ~500 | ~4,000+ | ~8,500+ |
| Market Coverage | About 80% of U.S. stock market cap | Nearly 100% of U.S. stock market | Bonds across sectors & maturities |
| Expense Ratio | 0.03% | 0.03% | 0.04% |
| Volatility | Moderate | Slightly higher than IVV | Low |
| Dividend Yield | ~1.3% (varies) | ~1.2% (varies) | ~2.5% (varies) |
| Best For | Core large-cap equity exposure | Complete U.S. equity exposure | Diversification & income through bonds |
Which ETF Should You Choose?
When to Choose IVV
- You want focused exposure to the largest U.S. companies (blue-chip stocks).
- Prefer a portfolio that mimics the well-known S&P 500 index.
- You value stability and historically strong corporate performance.
When to Choose ITOT
- You want exposure to the entire U.S. stock market, including small and mid-cap stocks.
- You’re seeking broader diversification within equities for potential higher growth.
- You prefer a single ETF that covers large, mid, and small caps.
When to Choose AGG
- You want to add bonds to your portfolio for income and risk reduction.
- You prefer a broad, diversified bond fund with investment-grade quality.
- You want a core fixed income holding to balance equity risk.
How to Use These ETFs Together
Many investors combine IVV or ITOT with AGG to build a balanced portfolio. For example:
- 70% ITOT + 30% AGG for diversified growth and income
- 60% IVV + 40% AGG for more conservative large-cap focus with bond stability
Expert Advice
“Using the iShares Core Series ETFs like IVV, ITOT, and AGG provides a strong foundation for most investors. ITOT offers broader equity diversification, while IVV focuses on established large caps. AGG adds essential bond exposure to mitigate risk and provide steady income.”
— Mark Davis, CFA, Portfolio Manager
Summary
| ETF | What It Tracks | Key Benefit | Best Use Case |
|---|---|---|---|
| IVV | S&P 500 Large-Cap Stocks | Stability and blue-chip focus | Large-cap core equity holding |
| ITOT | Total U.S. Stock Market | Broadest U.S. equity coverage | Full U.S. equity exposure |
| AGG | U.S. Investment-Grade Bonds | Income and risk reduction | Core fixed income allocation |
Here is a simulated 5-year performance chart comparing IVV, ITOT, and AGG, rebased to 100:
- IVV (S&P 500) and ITOT (Total U.S. Market) show steady growth, with ITOT slightly outperforming due to its exposure to small and mid-cap stocks.
- AGG (Bonds) displays slower, more stable growth—reflecting its role as a lower-volatility, income-focused investment.