The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between ITOT and DFAC? And which fund is better?
The expense ratio of ITOT is 0.16 percentage points lower than DFAC’s (0.03% vs. 0.19%). ITOT also has a higher exposure to the technology sector and a lower standard deviation. Overall, ITOT has provided higher returns than DFAC over the past ten years.
In this article, we’ll compare ITOT vs. DFAC. We’ll look at annual returns and risk metrics, as well as at their performance and portfolio growth. Moreover, I’ll also discuss ITOT’s and DFAC’s fund composition, industry exposure, and holdings and examine how these affect their overall returns.
Summary
| ITOT | DFAC | |
| Name | iShares Core S&P Total U.S. Stock Market ETF | Dimensional U.S. Core Equity 2 ETF |
| Category | Large Blend | Large Blend |
| Issuer | iShares | Dimensional Fund Advisors |
| AUM | 41.97B | 13.53B |
| Avg. Return | 14.59% | 13.93% |
| Div. Yield | 1.2% | 1.0% |
| Expense Ratio | 0.03% | 0.19% |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.
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%.
ITOT’s dividend yield is 0.20% higher than that of DFAC (1.2% vs. 1.0%). Also, ITOT yielded on average 0.66% more per year over the past decade (14.59% vs. 13.93%). The expense ratio of ITOT is 0.16 percentage points lower than DFAC’s (0.03% vs. 0.19%).
Fund Composition
Industry Exposure
| ITOT | DFAC | |
| Technology | 24.49% | 22.81% |
| Industrials | 9.21% | 14.13% |
| Energy | 2.51% | 2.67% |
| Communication Services | 10.54% | 7.63% |
| Utilities | 2.35% | 1.54% |
| Healthcare | 13.59% | 12.09% |
| Consumer Defensive | 5.79% | 5.94% |
| Real Estate | 3.67% | 0.37% |
| Financial Services | 13.69% | 16.17% |
| Consumer Cyclical | 11.69% | 13.09% |
| Basic Materials | 2.47% | 3.56% |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.
ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.
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%.
ITOT is 1.68% more exposed to the Technology sector than DFAC (24.49% vs 22.81%). ITOT’s exposure to Financial Services and Healthcare stocks is 2.48% lower and 1.50% higher respectively (13.69% vs. 16.17% and 13.59% vs. 12.09%). In total, Basic Materials, Energy, and Real Estate also make up 2.05% more of the fund’s holdings compared to DFAC (8.65% vs. 6.60%).
Holdings
| ITOT Holdings | Weight |
| Apple Inc | 5.07% |
| Microsoft Corp | 4.75% |
| Amazon.com Inc | 3.16% |
| Facebook Inc Class A | 1.89% |
| Alphabet Inc Class A | 1.79% |
| Alphabet Inc Class C | 1.71% |
| Tesla Inc | 1.17% |
| Berkshire Hathaway Inc Class B | 1.17% |
| NVIDIA Corp | 1.08% |
| JPMorgan Chase & Co | 1.02% |
ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.
Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.
| 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%.
Risk Analysis
| ITOT | DFAC | |
| Mean Return | 1.27 | 1.19 |
| R-squared | 99.4 | 95.1 |
| Std. Deviation | 14.02 | 15.55 |
| Alpha | -0.54 | -2.75 |
| Beta | 1.03 | 1.12 |
| Sharpe Ratio | 1.04 | 0.88 |
| Treynor Ratio | 14.13 | 11.85 |
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a Sharpe Ratio of 1.04 with a Treynor Ratio of 14.13 and a R-squared of 99.4. Its Alpha is -0.54 while ITOT’s Beta is 1.03. Furthermore, the fund has a Standard Deviation of 14.02 and a Mean Return of 1.27.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Standard Deviation of 15.55 with a Treynor Ratio of 11.85 and a Mean Return of 1.19. Its Sharpe Ratio is 0.88 while DFAC’s Alpha is -2.75. Furthermore, the fund has a Beta of 1.12 and a R-squared of 95.1.
ITOT’s Mean Return is 0.08 points higher than that of DFAC and its R-squared is 4.30 points higher. With a Standard Deviation of 14.02, ITOT is slightly less volatile than DFAC. The Alpha and Beta of ITOT are 2.21 points higher and 0.09 points lower than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | ITOT | DFAC |
| 2020 | 20.75% | 15.8% |
| 2019 | 30.87% | 29.54% |
| 2018 | -5.27% | -9.43% |
| 2017 | 21.23% | 18.82% |
| 2016 | 12.59% | 16.31% |
| 2015 | 0.96% | -2.53% |
| 2014 | 13.01% | 9.56% |
| 2013 | 32.67% | 37.55% |
| 2012 | 15.98% | 17.93% |
| 2011 | 1.55% | -1.96% |
| 2010 | 16.15% | 21.67% |
ITOT had its best year in 2013 with an annual return of 32.67%. ITOT’s worst year over the past decade yielded -5.27% and occurred in 2018. In most years the iShares Core S&P Total U.S. Stock Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.01%, 15.98%, and 16.15% 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 |
| ITOT | $10,000 | $42,310 | 14.59% |
| DFAC | $10,000 | $38,796 | 13.93% |
A $10,000 investment in ITOT would have resulted in a final balance of $42,310. This is a profit of $32,310 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.59%.
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%.
ITOT’s CAGR is 0.66 percentage points higher than that of DFAC and as a result, would have yielded $3,514 more on a $10,000 investment. Thus, ITOT outperformed DFAC by 0.66% annually.
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