The iShares Russell 2000 Value ETF (IWN) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. IWN is a iShares Small Value fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between IWN and DFAC? And which fund is better?
The expense ratio of IWN is 0.05 percentage points higher than DFAC’s (0.24% vs. 0.19%). IWN also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWN has provided lower returns than DFAC over the past 11 years.
In this article, we’ll compare IWN vs. DFAC. We’ll look at risk metrics and portfolio growth, as well as at their industry exposure and performance. Moreover, I’ll also discuss IWN’s and DFAC’s annual returns, fund composition, and holdings and examine how these affect their overall returns.
|Name||iShares Russell 2000 Value ETF||Dimensional U.S. Core Equity 2 ETF|
|Category||Small Value||Large Blend|
|Issuer||iShares||Dimensional Fund Advisors|
The iShares Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
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%.
IWN’s dividend yield is 0.26% higher than that of DFAC (1.26% vs. 1.0%). Also, IWN yielded on average 2.97% less per year over the past decade (10.96% vs. 13.93%). The expense ratio of IWN is 0.05 percentage points higher than DFAC’s (0.24% vs. 0.19%).
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The iShares Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.
IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.
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%.
IWN is 6.80% more exposed to the Financial Services sector than DFAC (22.97% vs 16.17%). IWN’s exposure to Industrials and Real Estate stocks is 0.45% higher and 13.99% higher respectively (14.58% vs. 14.13% and 14.36% vs. 0.37%). In total, Communication Services, Basic Materials, and Utilities also make up 0.42% more of the fund’s holdings compared to DFAC (13.15% vs. 12.73%).
|AMC Entertainment Holdings Inc Class A||1.06%|
|Tenet Healthcare Corp||0.47%|
|Stag Industrial Inc||0.47%|
|EMCOR Group Inc||0.42%|
|Valley National Bancorp||0.37%|
|Chesapeake Energy Corp Ordinary Shares – New||0.37%|
|Agree Realty Corp||0.36%|
|Essent Group Ltd||0.35%|
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
|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 Value ETF (IWN) has a Standard Deviation of 19.28 with a Treynor Ratio of 8.3 and a Alpha of -6.32. Its R-squared is 72.64 while IWN’s Beta is 1.21. Furthermore, the fund has a Sharpe Ratio of 0.59 and a Mean Return of 1.01.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Beta of 1.12 with a Mean Return of 1.19 and a Treynor Ratio of 11.85. Its Alpha is -2.75 while DFAC’s Sharpe Ratio is 0.88. Furthermore, the fund has a Standard Deviation of 15.55 and a R-squared of 95.1.
IWN’s Mean Return is 0.18 points lower than that of DFAC and its R-squared is 22.46 points lower. With a Standard Deviation of 19.28, IWN is slightly more volatile than DFAC. The Alpha and Beta of IWN are 3.57 points lower and 0.09 points higher than DFAC’s Alpha and Beta.
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IWN had its best year in 2013 with an annual return of 34.3%. IWN’s worst year over the past decade yielded -12.94% and occurred in 2018. In most years the iShares Russell 2000 Value ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 4.5%, 7.73%, and 17.92% 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 IWN would have resulted in a final balance of $28,189. This is a profit of $18,189 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.96%.
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%.
IWN’s CAGR is 2.97 percentage points lower than that of DFAC and as a result, would have yielded $10,607 less on a $10,000 investment. Thus, IWN performed worse than DFAC by 2.97% annually.
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