IWB vs. DFAC: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between IWB and DFAC? And which fund is better?

The expense ratio of IWB is 0.04 percentage points lower than DFAC’s (0.15% vs. 0.19%). IWB also has a higher exposure to the technology sector and a lower standard deviation. Overall, IWB has provided higher returns than DFAC over the past ten years.

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

Summary

IWB DFAC
Name iShares Russell 1000 ETF Dimensional U.S. Core Equity 2 ETF
Category Large Blend Large Blend
Issuer iShares Dimensional Fund Advisors
AUM 30.54B 13.53B
Avg. Return 14.64% 13.93%
Div. Yield 1.14% 1.0%
Expense Ratio 0.15% 0.19%

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

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%.

IWB’s dividend yield is 0.14% higher than that of DFAC (1.14% vs. 1.0%). Also, IWB yielded on average 0.70% more per year over the past decade (14.64% vs. 13.93%). The expense ratio of IWB is 0.04 percentage points lower than DFAC’s (0.15% vs. 0.19%).

Fund Composition

Industry Exposure

IWB vs. DFAC - Industry Exposure

IWB DFAC
Technology 25.33% 22.81%
Industrials 8.88% 14.13%
Energy 2.44% 2.67%
Communication Services 10.83% 7.63%
Utilities 2.36% 1.54%
Healthcare 13.35% 12.09%
Consumer Defensive 5.97% 5.94%
Real Estate 3.34% 0.37%
Financial Services 13.64% 16.17%
Consumer Cyclical 11.85% 13.09%
Basic Materials 2.02% 3.56%

The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

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%.

IWB is 2.52% more exposed to the Technology sector than DFAC (25.33% vs 22.81%). IWB’s exposure to Financial Services and Healthcare stocks is 2.53% lower and 1.26% higher respectively (13.64% vs. 16.17% and 13.35% vs. 12.09%). In total, Utilities, Energy, and Real Estate also make up 3.56% more of the fund’s holdings compared to DFAC (8.14% vs. 4.58%).

Holdings

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

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%.

Risk Analysis

IWB DFAC
Mean Return 1.27 1.19
R-squared 99.73 95.1
Std. Deviation 13.87 15.55
Alpha -0.38 -2.75
Beta 1.02 1.12
Sharpe Ratio 1.05 0.88
Treynor Ratio 14.31 11.85

The iShares Russell 1000 ETF (IWB) has a Alpha of -0.38 with a Mean Return of 1.27 and a Beta of 1.02. Its Standard Deviation is 13.87 while IWB’s Treynor Ratio is 14.31. Furthermore, the fund has a Sharpe Ratio of 1.05 and a R-squared of 99.73.

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 Alpha of -2.75. Its Treynor Ratio is 11.85 while DFAC’s R-squared is 95.1. Furthermore, the fund has a Mean Return of 1.19 and a Beta of 1.12.

IWB’s Mean Return is 0.08 points higher than that of DFAC and its R-squared is 4.63 points higher. With a Standard Deviation of 13.87, IWB is slightly less volatile than DFAC. The Alpha and Beta of IWB are 2.37 points higher and 0.10 points lower than DFAC’s Alpha and Beta.

Performance

Annual Returns

IWB vs. DFAC - Annual Returns

Year IWB DFAC
2020 20.8% 15.8%
2019 31.26% 29.54%
2018 -4.91% -9.43%
2017 21.53% 18.82%
2016 11.91% 16.31%
2015 0.82% -2.53%
2014 13.08% 9.56%
2013 32.93% 37.55%
2012 16.27% 17.93%
2011 1.36% -1.96%
2010 15.94% 21.67%

IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% 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

IWB vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $42,462 14.64%
DFAC $10,000 $38,796 13.93%

A $10,000 investment in IWB would have resulted in a final balance of $42,462. This is a profit of $32,462 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

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%.

IWB’s CAGR is 0.70 percentage points higher than that of DFAC and as a result, would have yielded $3,666 more on a $10,000 investment. Thus, IWB outperformed DFAC by 0.70% annually.


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