The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. BSV is a Vanguard Short-Term Bond fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between BSV and DFAC? And which fund is better?
The expense ratio of BSV is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%). BSV is mostly comprised of AAA bonds while DFAC has a high exposure to the technology sector. Overall, BSV has provided lower returns than DFAC over the past ten years.
In this article, we’ll compare BSV vs. DFAC. We’ll look at fund composition and holdings, as well as at their industry exposure and performance. Moreover, I’ll also discuss BSV’s and DFAC’s risk metrics, portfolio growth, and annual returns and examine how these affect their overall returns.
|Name||Vanguard Short-Term Bond Index Fund ETF Shares||Dimensional U.S. Core Equity 2 ETF|
|Category||Short-Term Bond||Large Blend|
|Issuer||Vanguard||Dimensional Fund Advisors|
The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% 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%.
BSV’s dividend yield is 0.48% higher than that of DFAC (1.48% vs. 1.0%). Also, BSV yielded on average 11.66% less per year over the past decade (2.27% vs. 13.93%). The expense ratio of BSV is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%).
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|BSV Bond Sectors||Weight|
BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.
|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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The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a R-squared of 78.38 with a Alpha of 0.21 and a Treynor Ratio of 3.33. Its Standard Deviation is 1.33 while BSV’s Beta is 0.38. Furthermore, the fund has a Mean Return of 0.16 and a Sharpe Ratio of 0.98.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a R-squared of 95.1 with a Alpha of -2.75 and a Beta of 1.12. Its Sharpe Ratio is 0.88 while DFAC’s Treynor Ratio is 11.85. Furthermore, the fund has a Standard Deviation of 15.55 and a Mean Return of 1.19.
BSV’s Mean Return is 1.03 points lower than that of DFAC and its R-squared is 16.72 points lower. With a Standard Deviation of 1.33, BSV is slightly less volatile than DFAC. The Alpha and Beta of BSV are 2.96 points higher and 0.74 points lower than DFAC’s Alpha and Beta.
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BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in BSV would have resulted in a final balance of $12,785. This is a profit of $2,785 over 11 years and amounts to a compound annual growth rate (CAGR) of 2.27%.
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%.
BSV’s CAGR is 11.66 percentage points lower than that of DFAC and as a result, would have yielded $26,011 less on a $10,000 investment. Thus, BSV performed worse than DFAC by 11.66% annually.
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