The iShares Russell 2000 ETF (IWM) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. IWM is a iShares Small Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between IWM and DFAC? And which fund is better?
IWM and DFAC have the same expense ratio: 0.19%. IWM also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, IWM has provided lower returns than DFAC over the past ten years.
In this article, we’ll compare IWM vs. DFAC. We’ll look at risk metrics and fund composition, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss IWM’s and DFAC’s industry exposure, performance, and holdings and examine how these affect their overall returns.
|Name||iShares Russell 2000 ETF||Dimensional U.S. Core Equity 2 ETF|
|Category||Small Blend||Large Blend|
|Issuer||iShares||Dimensional Fund Advisors|
The iShares Russell 2000 ETF (IWM) is a Small Blend fund that is issued by iShares. It currently has 66.48B total assets under management and has yielded an average annual return of 13.52% over the past 10 years. The fund has a dividend yield of 0.86% 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%.
IWM’s dividend yield is 0.14% lower than that of DFAC (0.86% vs. 1.0%). Also, IWM yielded on average 0.41% less per year over the past decade (13.52% vs. 13.93%). IWM and DFAC have the same expense ratio: 0.19%.
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The iShares Russell 2000 ETF (IWM) has the most exposure to the Healthcare sector at 20.3%. This is followed by Industrials and Technology at 14.78% and 14.21% respectively. Consumer Defensive (3.65%), Basic Materials (3.74%), and Energy (3.74%) only make up 11.13% of the fund’s total assets.
IWM’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.79%, 8.59%, 10.99%, 13.76%, and 14.21%.
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%.
IWM is 8.21% more exposed to the Healthcare sector than DFAC (20.3% vs 12.09%). IWM’s exposure to Industrials and Technology stocks is 0.65% higher and 8.60% lower respectively (14.78% vs. 14.13% and 14.21% vs. 22.81%). In total, Consumer Defensive, Basic Materials, and Energy also make up 1.04% less of the fund’s holdings compared to DFAC (11.13% vs. 12.17%).
|AMC Entertainment Holdings Inc Class A||0.52%|
|Intellia Therapeutics Inc||0.33%|
|BlackRock Cash Funds Treasury SL Agency||0.29%|
|Tenet Healthcare Corp||0.26%|
|Lattice Semiconductor Corp||0.26%|
|Tetra Tech Inc||0.25%|
|EastGroup Properties Inc||0.24%|
|Arrowhead Pharmaceuticals Inc||0.24%|
IWM’s Top Holdings are AMC Entertainment Holdings Inc Class A, Intellia Therapeutics Inc, Crocs Inc, BlackRock Cash Funds Treasury SL Agency, and Tenet Healthcare Corp at 0.52%, 0.33%, 0.3%, 0.29%, and 0.26%.
Lattice Semiconductor Corp (0.26%), Tetra Tech Inc (0.25%), and II-VI Inc (0.25%) have a slightly smaller but still significant weight. EastGroup Properties Inc and Arrowhead Pharmaceuticals Inc are also represented in the IWM’s holdings at 0.24% and 0.24%.
|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%.
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The iShares Russell 2000 ETF (IWM) has a Treynor Ratio of 9.56 with a Sharpe Ratio of 0.68 and a Alpha of -5.12. Its R-squared is 77.73 while IWM’s Beta is 1.23. Furthermore, the fund has a Mean Return of 1.12 and a Standard Deviation of 18.87.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Standard Deviation of 15.55 with a Mean Return of 1.19 and a R-squared of 95.1. Its Treynor Ratio is 11.85 while DFAC’s Alpha is -2.75. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Beta of 1.12.
IWM’s Mean Return is 0.07 points lower than that of DFAC and its R-squared is 17.37 points lower. With a Standard Deviation of 18.87, IWM is slightly more volatile than DFAC. The Alpha and Beta of IWM are 2.37 points lower and 0.11 points higher than DFAC’s Alpha and Beta.
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IWM had its best year in 2013 with an annual return of 38.85%. IWM’s worst year over the past decade yielded -11.02% and occurred in 2018. In most years the iShares Russell 2000 ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 14.66%, 16.39%, and 19.89% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IWM would have resulted in a final balance of $36,686. This is a profit of $26,686 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.52%.
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%.
IWM’s CAGR is 0.41 percentage points lower than that of DFAC and as a result, would have yielded $2,110 less on a $10,000 investment. Thus, IWM performed worse than DFAC by 0.41% annually.
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