An Overlooked ETF Rakes In The Cash

There are plenty of total market exchange-traded funds on the market, and many are large in terms of assets under management — meaning it would be inaccurate to call these funds obscure. However, some do fit the bill as overlooked.

Total Market ETFs

That is the case with the iShares Core S&P Total U.S. Stock Market ETF (iShares S&P 1500 Index Fund (The) ITOT). As its name implies, ITOT is part of the iShares core suite of low-cost ETFs and ITOT is indeed inexpensive. The ETF carries an annual expense ratio of a meager 0.03 percent, or $3 a year on $10,000 investment. That makes ITOT one of the least expensive ETFs on the market today.

Home to nearly $5.2 billion in assets under management, ITOT is certainly large, but it has recently gotten bigger due to a spate of fresh capital flowing into the ETF.

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“ITOT has reeled in more than $450 million in recent sessions via creation flows, in fact, boosting its asset base above $5.1 billion at the moment. A quick look at the chart below will show the recent swell in trading volume to around the 8 million share mark in one trading session (645,000 shares trade daily in this product),” said Street One Financial Vice President Paul Weisbruch in a recent note.

Digging Deeper Into ITOT

ITOT allocates 20.7 percent of its weight to technology stocks. In a departure from the S&P 500, ITOT's second-largest sector allocation is healthcare, not financial services, which place third in the ETF followed by consumer discretionary and industrial stocks.

ITOT follows the S&P Total Market Index, which is a vastly different benchmark than the S&P 500. Notably, ITOT is home to more than 3,700 stocks. Still, ITOT's three-year returns and annualized volatility are not vastly different than the S&P 500's. Over the past 36 months, ITOT has lagged the S&P 500 by 1 percent with essentially the same annualized volatility.

“From a category and competitive standpoint, ITOT fits within the 'All Cap Equity' space along with fifty-six other ETFs presently listed within the U.S. landscape. ITOT is currently is the fifth largest fund in the space in terms of asset size,” added Weisbruch.

At the end of the day, ITOT is a fine alternative for investors looking for exposure to a deeper bench of stocks than are available in the S&P 500 and for investors looking to scrimp every penny they can from their ETF investments.

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