BIV vs. DFAC: What’s The Difference?

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. BIV is a Vanguard Intermediate-Term Bond fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between BIV and DFAC? And which fund is better?

The expense ratio of BIV is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%). BIV is mostly comprised of AAA bonds while DFAC has a high exposure to the technology sector. Overall, BIV has provided lower returns than DFAC over the past 11 years.

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

Summary

BIV DFAC
Name Vanguard Intermediate-Term Bond Index Fund ETF Shares Dimensional U.S. Core Equity 2 ETF
Category Intermediate-Term Bond Large Blend
Issuer Vanguard Dimensional Fund Advisors
AUM 39.05B 13.53B
Avg. Return 5.31% 13.93%
Div. Yield 2.06% 1.0%
Expense Ratio 0.05% 0.19%

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

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%.

BIV’s dividend yield is 1.06% higher than that of DFAC (2.06% vs. 1.0%). Also, BIV yielded on average 8.62% less per year over the past decade (5.31% vs. 13.93%). The expense ratio of BIV is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%).

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Fund Composition

Holdings

BIV - Holdings

BIV Bond Sectors Weight
AAA 54.51%
BBB 25.24%
A 16.97%
AA 3.1%
Others 0.15%
Below B 0.03%
B 0.0%
BB 0.0%
US Government 0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

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%.

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Risk Analysis

BIV DFAC
Mean Return 0.35 1.19
R-squared 95.12 95.1
Std. Deviation 4.09 15.55
Alpha -0.07 -2.75
Beta 1.33 1.12
Sharpe Ratio 0.89 0.88
Treynor Ratio 2.72 11.85

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Treynor Ratio of 2.72 with a Sharpe Ratio of 0.89 and a Beta of 1.33. Its Standard Deviation is 4.09 while BIV’s Mean Return is 0.35. Furthermore, the fund has a Alpha of -0.07 and a R-squared of 95.12.

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

BIV’s Mean Return is 0.84 points lower than that of DFAC and its R-squared is 0.02 points higher. With a Standard Deviation of 4.09, BIV is slightly less volatile than DFAC. The Alpha and Beta of BIV are 2.68 points higher and 0.21 points higher than DFAC’s Alpha and Beta.

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Performance

Annual Returns

BIV vs. DFAC - Annual Returns

Year BIV DFAC
2020 9.71% 15.8%
2019 10.19% 29.54%
2018 -0.09% -9.43%
2017 3.8% 18.82%
2016 2.86% 16.31%
2015 1.23% -2.53%
2014 7.0% 9.56%
2013 -3.44% 37.55%
2012 7.02% 17.93%
2011 10.62% -1.96%
2010 9.55% 21.67%

BIV had its best year in 2011 with an annual return of 10.62%. BIV’s worst year over the past decade yielded -3.44% and occurred in 2013. In most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2012 where annual returns amounted to 3.8%, 7.0%, and 7.02% 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

BIV vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BIV $10,000 $17,492 5.31%
DFAC $10,000 $38,796 13.93%

A $10,000 investment in BIV would have resulted in a final balance of $17,492. This is a profit of $7,492 over 11 years and amounts to a compound annual growth rate (CAGR) of 5.31%.

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%.

BIV’s CAGR is 8.62 percentage points lower than that of DFAC and as a result, would have yielded $21,304 less on a $10,000 investment. Thus, BIV performed worse than DFAC by 8.62% annually.


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