The iShares Russell 1000 Value ETF (IWD) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. IWD is a iShares Large Value fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between IWD and DFAC? And which fund is better?
IWD and DFAC have the same expense ratio: 0.19%. IWD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, IWD has provided lower returns than DFAC over the past ten years.
In this article, we’ll compare IWD vs. DFAC. We’ll look at industry exposure and holdings, as well as at their fund composition and portfolio growth. Moreover, I’ll also discuss IWD’s and DFAC’s annual returns, risk metrics, and performance and examine how these affect their overall returns.
Summary
| IWD | DFAC | |
| Name | iShares Russell 1000 Value ETF | Dimensional U.S. Core Equity 2 ETF |
| Category | Large Value | Large Blend |
| Issuer | iShares | Dimensional Fund Advisors |
| AUM | 54.1B | 13.53B |
| Avg. Return | 11.40% | 13.93% |
| Div. Yield | 1.57% | 1.0% |
| Expense Ratio | 0.19% | 0.19% |
The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.
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%.
IWD’s dividend yield is 0.57% higher than that of DFAC (1.57% vs. 1.0%). Also, IWD yielded on average 2.53% less per year over the past decade (11.40% vs. 13.93%). IWD and DFAC have the same expense ratio: 0.19%.
Fund Composition
Industry Exposure
| IWD | DFAC | |
| Technology | 10.28% | 22.81% |
| Industrials | 11.77% | 14.13% |
| Energy | 4.76% | 2.67% |
| Communication Services | 8.67% | 7.63% |
| Utilities | 4.88% | 1.54% |
| Healthcare | 17.78% | 12.09% |
| Consumer Defensive | 7.76% | 5.94% |
| Real Estate | 4.94% | 0.37% |
| Financial Services | 20.43% | 16.17% |
| Consumer Cyclical | 5.62% | 13.09% |
| Basic Materials | 3.1% | 3.56% |
The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.
IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.
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%.
IWD is 4.26% more exposed to the Financial Services sector than DFAC (20.43% vs 16.17%). IWD’s exposure to Healthcare and Industrials stocks is 5.69% higher and 2.36% lower respectively (17.78% vs. 12.09% and 11.77% vs. 14.13%). In total, Energy, Utilities, and Real Estate also make up 10.00% more of the fund’s holdings compared to DFAC (14.58% vs. 4.58%).
Holdings
| IWD Holdings | Weight |
| Berkshire Hathaway Inc Class B | 2.58% |
| JPMorgan Chase & Co | 2.25% |
| Johnson & Johnson | 2.24% |
| UnitedHealth Group Inc | 1.78% |
| Procter & Gamble Co | 1.71% |
| The Walt Disney Co | 1.5% |
| Bank of America Corp | 1.43% |
| Comcast Corp Class A | 1.33% |
| Exxon Mobil Corp | 1.2% |
| Pfizer Inc | 1.18% |
IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.
The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.
| 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
| IWD | DFAC | |
| Mean Return | 1.03 | 1.19 |
| R-squared | 92.38 | 95.1 |
| Std. Deviation | 14.35 | 15.55 |
| Alpha | -3.23 | -2.75 |
| Beta | 1.02 | 1.12 |
| Sharpe Ratio | 0.81 | 0.88 |
| Treynor Ratio | 11.06 | 11.85 |
The iShares Russell 1000 Value ETF (IWD) has a Treynor Ratio of 11.06 with a R-squared of 92.38 and a Mean Return of 1.03. Its Beta is 1.02 while IWD’s Sharpe Ratio is 0.81. Furthermore, the fund has a Standard Deviation of 14.35 and a Alpha of -3.23.
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 R-squared of 95.1. Its Sharpe Ratio is 0.88 while DFAC’s Alpha is -2.75. Furthermore, the fund has a Beta of 1.12 and a Mean Return of 1.19.
IWD’s Mean Return is 0.16 points lower than that of DFAC and its R-squared is 2.72 points lower. With a Standard Deviation of 14.35, IWD is slightly less volatile than DFAC. The Alpha and Beta of IWD are 0.48 points lower and 0.10 points lower than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | IWD | DFAC |
| 2020 | 2.67% | 15.8% |
| 2019 | 26.34% | 29.54% |
| 2018 | -8.4% | -9.43% |
| 2017 | 13.47% | 18.82% |
| 2016 | 17.09% | 16.31% |
| 2015 | -3.95% | -2.53% |
| 2014 | 13.21% | 9.56% |
| 2013 | 32.18% | 37.55% |
| 2012 | 17.28% | 17.93% |
| 2011 | 0.21% | -1.96% |
| 2010 | 15.3% | 21.67% |
IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% 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 |
| IWD | $10,000 | $30,746 | 11.40% |
| DFAC | $10,000 | $38,796 | 13.93% |
A $10,000 investment in IWD would have resulted in a final balance of $30,746. This is a profit of $20,746 over 11 years and amounts to a compound annual growth rate (CAGR) of 11.40%.
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%.
IWD’s CAGR is 2.53 percentage points lower than that of DFAC and as a result, would have yielded $8,050 less on a $10,000 investment. Thus, IWD performed worse than DFAC by 2.53% annually.
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