ACWI vs. DFAC: What’s The Difference?

The iShares MSCI ACWI ETF (ACWI) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. ACWI is a iShares N/A fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between ACWI and DFAC? And which fund is better?

The expense ratio of ACWI is 0.13 percentage points higher than DFAC’s (0.32% vs. 0.19%). ACWI also has a lower exposure to the technology sector and a lower standard deviation. Overall, ACWI has provided lower returns than DFAC over the past 11 years.

In this article, we’ll compare ACWI vs. DFAC. We’ll look at industry exposure and risk metrics, as well as at their holdings and fund composition. Moreover, I’ll also discuss ACWI’s and DFAC’s performance, annual returns, and portfolio growth and examine how these affect their overall returns.

Summary

ACWI DFAC
Name iShares MSCI ACWI ETF Dimensional U.S. Core Equity 2 ETF
Category N/A Large Blend
Issuer iShares Dimensional Fund Advisors
AUM 16.85B 13.53B
Avg. Return 10.21% 13.93%
Div. Yield 1.39% 1.0%
Expense Ratio 0.32% 0.19%

The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.

The Dimensional U.S. Core Equity 2 ETF (DFAC) is a Large Blend fund that is issued by Dimensional Fund Advisors. It currently has 13.53B total assets under management and has yielded an average annual return of 13.93% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.19%.

ACWI’s dividend yield is 0.39% higher than that of DFAC (1.39% vs. 1.0%). Also, ACWI yielded on average 3.72% less per year over the past decade (10.21% vs. 13.93%). The expense ratio of ACWI is 0.13 percentage points higher than DFAC’s (0.32% vs. 0.19%).

Fund Composition

Industry Exposure

ACWI vs. DFAC - Industry Exposure

ACWI DFAC
Technology 20.41% 22.81%
Industrials 9.65% 14.13%
Energy 3.48% 2.67%
Communication Services 9.87% 7.63%
Utilities 2.61% 1.54%
Healthcare 11.74% 12.09%
Consumer Defensive 7.15% 5.94%
Real Estate 2.75% 0.37%
Financial Services 15.58% 16.17%
Consumer Cyclical 12.01% 13.09%
Basic Materials 4.73% 3.56%

The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.

ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.

The Dimensional U.S. Core Equity 2 ETF (DFAC) has the most exposure to the Technology sector at 22.81%. This is followed by Financial Services and Industrials at 16.17% and 14.13% respectively. Utilities (1.54%), Energy (2.67%), and Basic Materials (3.56%) only make up 7.77% of the fund’s total assets.

DFAC’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Healthcare, Consumer Cyclical, and Industrials stocks at 5.94%, 7.63%, 12.09%, 13.09%, and 14.13%.

ACWI is 2.40% less exposed to the Technology sector than DFAC (20.41% vs 22.81%). ACWI’s exposure to Financial Services and Consumer Cyclical stocks is 0.59% lower and 1.08% lower respectively (15.58% vs. 16.17% and 12.01% vs. 13.09%). In total, Real Estate, Energy, and Basic Materials also make up 4.36% more of the fund’s holdings compared to DFAC (10.96% vs. 6.60%).

Holdings

ACWI - Holdings

ACWI Holdings Weight
Apple Inc 3.44%
Microsoft Corp 2.91%
Amazon.com Inc 2.21%
Facebook Inc A 1.25%
Alphabet Inc Class C 1.12%
Alphabet Inc A 1.09%
Taiwan Semiconductor Manufacturing Co Ltd 0.79%
Tesla Inc 0.78%
NVIDIA Corp 0.74%
JPMorgan Chase & Co 0.71%

ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.

Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.

DFAC - Holdings

DFAC Holdings Weight
Apple Inc 4.7%
Microsoft Corp 3.81%
Amazon.com Inc 2.39%
Johnson & Johnson 1.05%
Facebook Inc Class A 1.05%
JPMorgan Chase & Co 1.0%
Alphabet Inc Class C 0.85%
Alphabet Inc Class A 0.84%
Berkshire Hathaway Inc Class B 0.75%
Visa Inc Class A 0.74%

DFAC’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Johnson & Johnson, and Facebook Inc Class A at 4.7%, 3.81%, 2.39%, 1.05%, and 1.05%.

JPMorgan Chase & Co (1.0%), Alphabet Inc Class C (0.85%), and Alphabet Inc Class A (0.84%) have a slightly smaller but still significant weight. Berkshire Hathaway Inc Class B and Visa Inc Class A are also represented in the DFAC’s holdings at 0.75% and 0.74%.

Risk Analysis

ACWI DFAC
Mean Return 0.89 1.19
R-squared 99.96 95.1
Std. Deviation 14.05 15.55
Alpha 0.15 -2.75
Beta 1 1.12
Sharpe Ratio 0.71 0.88
Treynor Ratio 9.45 11.85

The iShares MSCI ACWI ETF (ACWI) has a Sharpe Ratio of 0.71 with a Treynor Ratio of 9.45 and a Alpha of 0.15. Its Standard Deviation is 14.05 while ACWI’s Beta is 1. Furthermore, the fund has a R-squared of 99.96 and a Mean Return of 0.89.

The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Standard Deviation of 15.55 with a Mean Return of 1.19 and a Sharpe Ratio of 0.88. Its R-squared is 95.1 while DFAC’s Treynor Ratio is 11.85. Furthermore, the fund has a Beta of 1.12 and a Alpha of -2.75.

ACWI’s Mean Return is 0.30 points lower than that of DFAC and its R-squared is 4.86 points higher. With a Standard Deviation of 14.05, ACWI is slightly less volatile than DFAC. The Alpha and Beta of ACWI are 2.90 points higher and 0.12 points lower than DFAC’s Alpha and Beta.

Performance

Annual Returns

ACWI vs. DFAC - Annual Returns

Year ACWI DFAC
2020 16.38% 15.8%
2019 26.7% 29.54%
2018 -9.15% -9.43%
2017 24.35% 18.82%
2016 8.22% 16.31%
2015 -2.39% -2.53%
2014 4.64% 9.56%
2013 22.91% 37.55%
2012 15.99% 17.93%
2011 -7.6% -1.96%
2010 12.31% 21.67%

ACWI had its best year in 2019 with an annual return of 26.7%. ACWI’s worst year over the past decade yielded -9.15% and occurred in 2018. In most years the iShares MSCI ACWI ETF provided moderate returns such as in 2016, 2010, and 2012 where annual returns amounted to 8.22%, 12.31%, and 15.99% respectively.

The year 2013 was the strongest year for DFAC, returning 37.55% on an annual basis. The poorest year for DFAC in the last ten years was 2018, with a yield of -9.43%. Most years the Dimensional U.S. Core Equity 2 ETF has given investors modest returns, such as in 2020, 2016, and 2012, when gains were 15.8%, 16.31%, and 17.93% respectively.

Portfolio Growth

ACWI vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
ACWI $10,000 $27,241 10.21%
DFAC $10,000 $38,796 13.93%

A $10,000 investment in ACWI would have resulted in a final balance of $27,241. This is a profit of $17,241 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.21%.

With a $10,000 investment in DFAC, the end total would have been $38,796. This equates to a $28,796 profit over 11 years and a compound annual growth rate (CAGR) of 13.93%.

ACWI’s CAGR is 3.72 percentage points lower than that of DFAC and as a result, would have yielded $11,555 less on a $10,000 investment. Thus, ACWI performed worse than DFAC by 3.72% annually.


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