SCHB vs. ITOT: A Tactical Edge in a Near-Identical Landscape

For a passive, long-term investor, the choice between the Schwab U.S. Broad Market ETF (SCHB) and the iShares Core S&P Total U.S. Stock Market ETF (ITOT) is a non-event. Both are ultra-low-cost, broad-market funds designed to capture the entire U.S. equity market. They charge the same 0.03% expense ratio, offer an identical 1.1% dividend yield, and delivered the same 1-year total return of 14.2% as of late 2025. Their portfolios are nearly mirror images, each holding around 2,500 stocks with nearly identical sector allocations. For someone building a core portfolio and rebalancing annually, the decision comes down to a preference for the fund manager-Schwab or BlackRock's iShares.

For a tactical investor, however, the differences in scale and liquidity create a minor but measurable edge. ITOT is the larger fund, with $80.4 billion in assets under management compared to SCHB's $38.3 billion. This size translates to higher average daily trading volume, making ITOT slightly more liquid. In practice, this means a tactical investor can execute larger trades with less slippage and a lower risk of a failed order. While both funds are considered high-volume and liquid, the edge in scale tilts the playing field toward ITOT for active management.

The bottom line is that these funds are engineered to be interchangeable for buy-and-hold strategies. The tactical advantage is real but small, residing in the practical mechanics of trading rather than any fundamental difference in the market exposure they provide.

The Tactical Edge: Scale and Liquidity

For a tactical investor making portfolio adjustments, the differences between these two broad-market ETFs are subtle but measurable. Both are considered high-volume and liquid, making them suitable for automated trading without major slippage concerns. Yet the scale advantage tilts the balance slightly in favor of the iShares fund.

The most concrete difference is size. The iShares Core S&P Total U.S. Stock Market ETF (ITOT) holds over twice the assets of its Schwab counterpart, with $80.4 billion in AUM compared to $38.3 billion for SCHB. This larger base of capital translates directly into trading activity. ITOT's average daily trading volume is more than double SCHB's, at $92.3 million versus $35.3 million.

This scale advantage makes ITOT the slightly more liquid choice. In practice, this means that for a given trade size, an investor is more likely to execute a purchase or sale of ITOT shares at a price closer to the midpoint of the bid-ask spread. The difference is minor for most individual trades, but it can be a relevant factor when making frequent, tactical portfolio shifts or when dealing with larger block orders.

The bottom line is that for a tactical strategy, the liquidity edge of ITOT is a tangible, if small, benefit. Both funds are excellent, low-cost vehicles for broad market exposure, but the sheer volume of trading in ITOT provides a margin of efficiency that could matter in a high-activity portfolio.

The Investor's Decision: Preference vs. Performance

For the vast majority of investors, the choice between SCHB and ITOT is not a decision about fundamental performance. The evidence shows two ultra-low-cost, broad-market ETFs with virtually identical performance, yield, and sector allocations. Both charge a minimal 0.03% expense ratio and track total U.S. market exposure, making their long-term returns indistinguishable. The real differentiator is fund manager preference: Charles Schwab versus BlackRock (iShares).

This preference translates directly into a tangible cost for some investors. For those using the Schwab platform, SCHB offers a clear advantage: commission-free trading. This is a direct, upfront benefit that can compound over time, especially for active investors making frequent trades. For Schwab users, this is a compelling reason to choose SCHB.

On the other hand, ITOT holds a significant edge in scale and liquidity, with assets under management more than double that of SCHB. This can be a minor advantage for large institutional trades, but for the average retail investor, the liquidity of both funds is already ample. The bottom line is that neither fund has a significant tax efficiency advantage over the other based on available evidence. They are both designed to be tax-efficient, and historical data shows they are expected to perform similarly in this regard.

The final choice, therefore, is a function of the investor's ecosystem. If you are already invested in Schwab's platform and value that commission-free access, SCHB is the logical pick. If you prefer BlackRock's iShares lineup or simply want the largest fund in the category, ITOT is the choice. For all other factors-cost, diversification, and long-term return-the decision is a wash.