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IAU vs. DFAC: What’s The Difference?

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

The expense ratio of IAU is 0.06 percentage points higher than DFAC’s (0.25% vs. 0.19%). IAU also has a lower exposure to the technology sector and a higher standard deviation. Overall, IAU has provided lower returns than DFAC over the past 11 years.

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

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Summary

IAUDFAC
NameiShares Gold TrustDimensional U.S. Core Equity 2 ETF
CategoryN/ALarge Blend
IssueriSharesDimensional Fund Advisors
AUM28.61B13.53B
Avg. Return6.03%13.93%
Div. Yield0.0%1.0%
Expense Ratio0.25%0.19%

The iShares Gold Trust (IAU) is a N/A fund that is issued by iShares. It currently has 28.61B total assets under management and has yielded an average annual return of 6.03% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.25%.

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%.

IAU’s dividend yield is 1.00% lower than that of DFAC (0.0% vs. 1.0%). Also, IAU yielded on average 7.90% less per year over the past decade (6.03% vs. 13.93%). The expense ratio of IAU is 0.06 percentage points higher than DFAC’s (0.25% vs. 0.19%).

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Fund Composition

Industry Exposure

IAU vs. DFAC - Industry Exposure

IAUDFAC
Technology0.0%22.81%
Industrials0.0%14.13%
Energy0.0%2.67%
Communication Services0.0%7.63%
Utilities0.0%1.54%
Healthcare0.0%12.09%
Consumer Defensive0.0%5.94%
Real Estate0.0%0.37%
Financial Services0.0%16.17%
Consumer Cyclical0.0%13.09%
Basic Materials0.0%3.56%

The iShares Gold Trust (IAU) has the most exposure to the Technology sector at 0.0%. This is followed by Industrials and Energy at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

IAU’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Energy stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

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%.

IAU is 22.81% less exposed to the Technology sector than DFAC (0.0% vs 22.81%). IAU’s exposure to Industrials and Energy stocks is 14.13% lower and 2.67% lower respectively (0.0% vs. 14.13% and 0.0% vs. 2.67%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 29.63% less of the fund’s holdings compared to DFAC (0.00% vs. 29.63%).

Holdings

IAU - Holdings

IAU HoldingsWeight
Gold100.0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%
N/A0%

IAU’s Top Holdings are Gold, N/A, N/A, N/A, and N/A at 100.0%, 0%, 0%, 0%, and 0%.

N/A (0%), N/A (0%), and N/A (0%) have a slightly smaller but still significant weight. N/A and N/A are also represented in the IAU’s holdings at 0% and 0%.

DFAC - Holdings

DFAC HoldingsWeight
Apple Inc4.7%
Microsoft Corp3.81%
Amazon.com Inc2.39%
Johnson & Johnson1.05%
Facebook Inc Class A1.05%
JPMorgan Chase & Co1.0%
Alphabet Inc Class C0.85%
Alphabet Inc Class A0.84%
Berkshire Hathaway Inc Class B0.75%
Visa Inc Class A0.74%

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

IAUDFAC
Mean Return0.231.19
R-squared16.0395.1
Std. Deviation16.9715.55
Alpha4.16-2.75
Beta0.481.12
Sharpe Ratio0.130.88
Treynor Ratio1.511.85

The iShares Gold Trust (IAU) has a R-squared of 16.03 with a Sharpe Ratio of 0.13 and a Mean Return of 0.23. Its Beta is 0.48 while IAU’s Alpha is 4.16. Furthermore, the fund has a Standard Deviation of 16.97 and a Treynor Ratio of 1.5.

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

IAU’s Mean Return is 0.96 points lower than that of DFAC and its R-squared is 79.07 points lower. With a Standard Deviation of 16.97, IAU is slightly more volatile than DFAC. The Alpha and Beta of IAU are 6.91 points higher and 0.64 points lower than DFAC’s Alpha and Beta.

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Performance

Annual Returns

IAU vs. DFAC - Annual Returns

YearIAUDFAC
202023.86%15.8%
201918.54%29.54%
2018-1.39%-9.43%
201711.58%18.82%
20168.85%16.31%
2015-11.65%-2.53%
2014-0.44%9.56%
2013-27.96%37.55%
20128.37%17.93%
20118.66%-1.96%
201027.93%21.67%

IAU had its best year in 2010 with an annual return of 27.93%. IAU’s worst year over the past decade yielded -27.96% and occurred in 2013. In most years the iShares Gold Trust provided moderate returns such as in 2012, 2011, and 2016 where annual returns amounted to 8.37%, 8.66%, and 8.85% 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

IAU vs. DFAC - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
IAU$10,000$16,7866.03%
DFAC$10,000$38,79613.93%

A $10,000 investment in IAU would have resulted in a final balance of $16,786. This is a profit of $6,786 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.03%.

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%.

IAU’s CAGR is 7.90 percentage points lower than that of DFAC and as a result, would have yielded $22,010 less on a $10,000 investment. Thus, IAU performed worse than DFAC by 7.90% annually.


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