Investing in the **Total U.S. Stock Market** is arguably the best strategy for most passive, long-term investors. It guarantees you own every company in the U.S., from Apple to the smallest small-cap. The three market leaders in this space are VTI, **SCHB (Schwab U.S. Broad Market ETF)**, and **ITOT (iShares Core S&P Total U.S. Stock Market ETF)**.
This guide breaks down the subtle differences between SCHB and ITOT, two of the lowest-cost ways to implement this strategy.
The Indexing Differences: Broader vs. Broad
Both funds are designed to capture 99% of the total U.S. market capitalization, but they use different underlying indices.
1. ITOT (iShares) - The Widest Net
**ITOT** tracks the **S&P Total Market Index**. This index aims to include all publicly traded U.S. stocks, resulting in around **3,500 holdings**. This provides slightly better coverage for the smallest Mid-cap and Small-cap companies than its competitor.
2. SCHB (Schwab) - Highly Efficient
**SCHB** tracks the **Dow Jones U.S. Broad Stock Market Index**. It typically holds around **2,500 stocks**. While the difference in holdings (1,000 stocks) sounds large, these are the very smallest micro-cap companies, which collectively make up less than 1% of the total fund's value.
Comparison Matrix (SCHB vs ITOT)
It is a photo finish, but the subtle differences exist.
| Feature | SCHB (Schwab) | ITOT (iShares) |
|---|---|---|
| Expense Ratio | 0.03% | 0.03% (Identical) |
| Number of Holdings | ~2,500 | ~3,500 (Broader) |
| Index Tracked | Dow Jones U.S. Broad Stock | S&P Total Market |
| Verdict | Excellent, Low-Cost | Slightly Broader Coverage |
The Verdict: ITOT is Marginally Broader, But Cost is Key
Cost is the Deciding Factor
Since both funds track the total market for the same incredibly low fee (**0.03%**), performance will be virtually identical. The choice between them often comes down to which brokerage ecosystem you prefer (Schwab vs. iShares).
ITOT's Slight Edge in Diversification
ITOT's use of the S&P Total Market Index gives it a technical edge in diversification, holding an extra 1,000 micro-cap stocks. However, this difference will not be noticeable in long-term returns, as these smallest companies barely move the needle.
Conclusion: Choose Based on Your Brokerage
Both SCHB and ITOT are phenomenal, low-cost investment vehicles. For the average passive investor, either fund is an excellent choice for a U.S. total market core.
