DGRO vs. DFAC: What’s The Difference?

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

The expense ratio of DGRO is 0.11 percentage points lower than DFAC’s (0.08% vs. 0.19%). DGRO also has a lower exposure to the technology sector and a lower standard deviation. Overall, DGRO has provided lower returns than DFAC over the past 6 years.

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

Summary

DGRO DFAC
Name iShares Core Dividend Growth ETF Dimensional U.S. Core Equity 2 ETF
Category Large Value Large Blend
Issuer iShares Dimensional Fund Advisors
AUM 20B 13.53B
Avg. Return 12.46% 13.93%
Div. Yield 2.04% 1.0%
Expense Ratio 0.08% 0.19%

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

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%.

DGRO’s dividend yield is 1.04% higher than that of DFAC (2.04% vs. 1.0%). Also, DGRO yielded on average 1.48% less per year over the past decade (12.46% vs. 13.93%). The expense ratio of DGRO is 0.11 percentage points lower than DFAC’s (0.08% vs. 0.19%).

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Fund Composition

Industry Exposure

DGRO vs. DFAC - Industry Exposure

DGRO DFAC
Technology 18.98% 22.81%
Industrials 12.52% 14.13%
Energy 0.11% 2.67%
Communication Services 4.53% 7.63%
Utilities 7.34% 1.54%
Healthcare 17.55% 12.09%
Consumer Defensive 10.24% 5.94%
Real Estate 0.0% 0.37%
Financial Services 18.47% 16.17%
Consumer Cyclical 7.42% 13.09%
Basic Materials 2.83% 3.56%

The iShares Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

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%.

DGRO is 3.83% less exposed to the Technology sector than DFAC (18.98% vs 22.81%). DGRO’s exposure to Financial Services and Healthcare stocks is 2.30% higher and 5.46% higher respectively (18.47% vs. 16.17% and 17.55% vs. 12.09%). In total, Energy, Basic Materials, and Communication Services also make up 6.39% less of the fund’s holdings compared to DFAC (7.47% vs. 13.86%).

Holdings

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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

DGRO DFAC
Mean Return 0 1.19
R-squared 0 95.1
Std. Deviation 0 15.55
Alpha 0 -2.75
Beta 0 1.12
Sharpe Ratio 0 0.88
Treynor Ratio 0 11.85

The iShares Core Dividend Growth ETF (DGRO) has a Standard Deviation of 0 with a Alpha of 0 and a Sharpe Ratio of 0. Its R-squared is 0 while DGRO’s Treynor Ratio is 0. Furthermore, the fund has a Beta of 0 and a Mean Return of 0.

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

DGRO’s Mean Return is 1.19 points lower than that of DFAC and its R-squared is 95.10 points lower. With a Standard Deviation of 0, DGRO is slightly less volatile than DFAC. The Alpha and Beta of DGRO are 2.75 points higher and 1.12 points lower than DFAC’s Alpha and Beta.

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Performance

Annual Returns

DGRO vs. DFAC - Annual Returns

Year DGRO DFAC
2020 9.47% 15.8%
2019 30.02% 29.54%
2018 -2.24% -9.43%
2017 22.84% 18.82%
2016 15.27% 16.31%
2015 -0.62% -2.53%
2014 0.0% 9.56%
2013 0.0% 37.55%
2012 0.0% 17.93%
2011 0.0% -1.96%
2010 0.0% 21.67%

DGRO had its best year in 2019 with an annual return of 30.02%. DGRO’s worst year over the past decade yielded -2.24% and occurred in 2018. In most years the iShares Core Dividend Growth ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% 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

DGRO vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
DGRO $10,000 $19,580 12.46%
DFAC $10,000 $18,300 13.93%

A $10,000 investment in DGRO would have resulted in a final balance of $19,580. This is a profit of $9,580 over 6 years and amounts to a compound annual growth rate (CAGR) of 12.46%.

With a $10,000 investment in DFAC, the end total would have been $18,300. This equates to a $8,300 profit over 6 years and a compound annual growth rate (CAGR) of 13.93%.

DGRO’s CAGR is 1.48 percentage points lower than that of DFAC and as a result, would have yielded $1,280 more on a $10,000 investment. Thus, DGRO performed worse than DFAC by 1.48% annually.


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