The iShares Core MSCI EAFE ETF (IEFA) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. IEFA is a iShares Foreign Large Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between IEFA and DFAC? And which fund is better?
The expense ratio of IEFA is 0.12 percentage points lower than DFAC’s (0.07% vs. 0.19%). IEFA also has a higher exposure to the industrials sector and a lower standard deviation. Overall, IEFA has provided lower returns than DFAC over the past ten years.
In this article, we’ll compare IEFA vs. DFAC. We’ll look at holdings and performance, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss IEFA’s and DFAC’s industry exposure, risk metrics, and fund composition and examine how these affect their overall returns.
Summary
| IEFA | DFAC | |
| Name | iShares Core MSCI EAFE ETF | Dimensional U.S. Core Equity 2 ETF |
| Category | Foreign Large Blend | Large Blend |
| Issuer | iShares | Dimensional Fund Advisors |
| AUM | 95.78B | 13.53B |
| Avg. Return | 5.79% | 13.93% |
| Div. Yield | 2.28% | 1.0% |
| Expense Ratio | 0.07% | 0.19% |
The iShares Core MSCI EAFE ETF (IEFA) is a Foreign Large Blend fund that is issued by iShares. It currently has 95.78B total assets under management and has yielded an average annual return of 5.79% over the past 10 years. The fund has a dividend yield of 2.28% with an expense ratio of 0.07%.
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%.
IEFA’s dividend yield is 1.28% higher than that of DFAC (2.28% vs. 1.0%). Also, IEFA yielded on average 8.15% less per year over the past decade (5.79% vs. 13.93%). The expense ratio of IEFA is 0.12 percentage points lower than DFAC’s (0.07% vs. 0.19%).
Fund Composition
Industry Exposure
| IEFA | DFAC | |
| Technology | 9.81% | 22.81% |
| Industrials | 16.32% | 14.13% |
| Energy | 3.19% | 2.67% |
| Communication Services | 5.53% | 7.63% |
| Utilities | 3.25% | 1.54% |
| Healthcare | 12.01% | 12.09% |
| Consumer Defensive | 9.78% | 5.94% |
| Real Estate | 4.31% | 0.37% |
| Financial Services | 15.91% | 16.17% |
| Consumer Cyclical | 11.96% | 13.09% |
| Basic Materials | 7.93% | 3.56% |
The iShares Core MSCI EAFE ETF (IEFA) has the most exposure to the Industrials sector at 16.32%. This is followed by Financial Services and Healthcare at 15.91% and 12.01% respectively. Utilities (3.25%), Real Estate (4.31%), and Communication Services (5.53%) only make up 13.09% of the fund’s total assets.
IEFA’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Technology, Consumer Cyclical, and Healthcare stocks at 7.93%, 9.78%, 9.81%, 11.96%, 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%.
IEFA is 2.19% more exposed to the Industrials sector than DFAC (16.32% vs 14.13%). IEFA’s exposure to Financial Services and Healthcare stocks is 0.26% lower and 0.08% lower respectively (15.91% vs. 16.17% and 12.01% vs. 12.09%). In total, Utilities, Real Estate, and Communication Services also make up 3.55% more of the fund’s holdings compared to DFAC (13.09% vs. 9.54%).
Holdings
| IEFA Holdings | Weight |
| Nestle SA | 1.77% |
| ASML Holding NV | 1.43% |
| Roche Holding AG | 1.31% |
| LVMH Moet Hennessy Louis Vuitton SE | 1.08% |
| Novartis AG | 1.0% |
| Toyota Motor Corp | 0.92% |
| AstraZeneca PLC | 0.78% |
| Unilever PLC | 0.76% |
| AIA Group Ltd | 0.74% |
| SAP SE | 0.73% |
IEFA’s Top Holdings are Nestle SA, ASML Holding NV, Roche Holding AG, LVMH Moet Hennessy Louis Vuitton SE, and Novartis AG at 1.77%, 1.43%, 1.31%, 1.08%, and 1.0%.
Toyota Motor Corp (0.92%), AstraZeneca PLC (0.78%), and Unilever PLC (0.76%) have a slightly smaller but still significant weight. AIA Group Ltd and SAP SE are also represented in the IEFA’s holdings at 0.74% and 0.73%.
| 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%.
Performance
Annual Returns
| Year | IEFA | DFAC |
| 2020 | 8.55% | 15.8% |
| 2019 | 22.67% | 29.54% |
| 2018 | -14.2% | -9.43% |
| 2017 | 26.42% | 18.82% |
| 2016 | 1.36% | 16.31% |
| 2015 | 0.53% | -2.53% |
| 2014 | -4.82% | 9.56% |
| 2013 | 23.73% | 37.55% |
| 2012 | 0.0% | 17.93% |
| 2011 | 0.0% | -1.96% |
| 2010 | 0.0% | 21.67% |
IEFA had its best year in 2017 with an annual return of 26.42%. IEFA’s worst year over the past decade yielded -14.2% and occurred in 2018. In most years the iShares Core MSCI EAFE ETF provided moderate returns such as in 2010, 2015, and 2016 where annual returns amounted to 0.0%, 0.53%, and 1.36% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IEFA | $10,000 | $14,008 | 5.79% |
| DFAC | $10,000 | $20,050 | 13.93% |
A $10,000 investment in IEFA would have resulted in a final balance of $14,008. This is a profit of $4,008 over 7 years and amounts to a compound annual growth rate (CAGR) of 5.79%.
With a $10,000 investment in DFAC, the end total would have been $20,050. This equates to a $10,050 profit over 7 years and a compound annual growth rate (CAGR) of 13.93%.
IEFA’s CAGR is 8.15 percentage points lower than that of DFAC and as a result, would have yielded $6,042 less on a $10,000 investment. Thus, IEFA performed worse than DFAC by 8.15% annually.
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