IWR vs. DFAC: What’s The Difference?

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

IWR and DFAC have the same expense ratio: 0.19%. IWR also has a lower exposure to the technology sector and a higher standard deviation. Overall, IWR has provided higher returns than DFAC over the past ten years.

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

Summary

IWR DFAC
Name iShares Russell Mid-Cap ETF Dimensional U.S. Core Equity 2 ETF
Category Mid-Cap Blend Large Blend
Issuer iShares Dimensional Fund Advisors
AUM 29.84B 13.53B
Avg. Return 14.15% 13.93%
Div. Yield 0.99% 1.0%
Expense Ratio 0.19% 0.19%

The iShares Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% 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%.

IWR’s dividend yield is 0.01% lower than that of DFAC (0.99% vs. 1.0%). Also, IWR yielded on average 0.22% more per year over the past decade (14.15% vs. 13.93%). IWR and DFAC have the same expense ratio: 0.19%.

Fund Composition

Industry Exposure

IWR vs. DFAC - Industry Exposure

IWR DFAC
Technology 19.67% 22.81%
Industrials 14.54% 14.13%
Energy 3.48% 2.67%
Communication Services 4.64% 7.63%
Utilities 4.46% 1.54%
Healthcare 11.76% 12.09%
Consumer Defensive 3.82% 5.94%
Real Estate 8.31% 0.37%
Financial Services 11.64% 16.17%
Consumer Cyclical 13.59% 13.09%
Basic Materials 4.1% 3.56%

The iShares Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.

IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, 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%.

IWR is 3.14% less exposed to the Technology sector than DFAC (19.67% vs 22.81%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 0.41% higher and 0.50% higher respectively (14.54% vs. 14.13% and 13.59% vs. 13.09%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 1.34% more of the fund’s holdings compared to DFAC (12.38% vs. 11.04%).

Holdings

IWR - Holdings

IWR Holdings Weight
IDEXX Laboratories Inc 0.51%
DocuSign Inc 0.51%
Twitter Inc 0.48%
Chipotle Mexican Grill Inc 0.47%
Roku Inc Class A 0.44%
Marvell Technology Inc 0.44%
DexCom Inc 0.44%
Trane Technologies PLC 0.43%
MSCI Inc 0.43%
Carrier Global Corp Ordinary Shares 0.43%

IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.

Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.

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

IWR DFAC
Mean Return 1.17 1.19
R-squared 91.52 95.1
Std. Deviation 15.66 15.55
Alpha -2.8 -2.75
Beta 1.11 1.12
Sharpe Ratio 0.86 0.88
Treynor Ratio 11.72 11.85

The iShares Russell Mid-Cap ETF (IWR) has a Sharpe Ratio of 0.86 with a Alpha of -2.8 and a Beta of 1.11. Its Standard Deviation is 15.66 while IWR’s Treynor Ratio is 11.72. Furthermore, the fund has a Mean Return of 1.17 and a R-squared of 91.52.

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 Sharpe Ratio of 0.88. Its Beta is 1.12 while DFAC’s Alpha is -2.75. Furthermore, the fund has a Mean Return of 1.19 and a R-squared of 95.1.

IWR’s Mean Return is 0.02 points lower than that of DFAC and its R-squared is 3.58 points lower. With a Standard Deviation of 15.66, IWR is slightly more volatile than DFAC. The Alpha and Beta of IWR are 0.05 points lower and 0.01 points lower than DFAC’s Alpha and Beta.

Performance

Annual Returns

IWR vs. DFAC - Annual Returns

Year IWR DFAC
2020 16.91% 15.8%
2019 30.31% 29.54%
2018 -9.13% -9.43%
2017 18.32% 18.82%
2016 13.58% 16.31%
2015 -2.57% -2.53%
2014 13.03% 9.56%
2013 34.5% 37.55%
2012 17.13% 17.93%
2011 -1.67% -1.96%
2010 25.25% 21.67%

IWR had its best year in 2013 with an annual return of 34.5%. IWR’s worst year over the past decade yielded -9.13% and occurred in 2018. In most years the iShares Russell Mid-Cap ETF provided moderate returns such as in 2016, 2020, and 2012 where annual returns amounted to 13.58%, 16.91%, and 17.13% 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

IWR vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWR $10,000 $39,751 14.15%
DFAC $10,000 $38,796 13.93%

A $10,000 investment in IWR would have resulted in a final balance of $39,751. This is a profit of $29,751 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.15%.

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%.

IWR’s CAGR is 0.22 percentage points higher than that of DFAC and as a result, would have yielded $955 more on a $10,000 investment. Thus, IWR outperformed DFAC by 0.22% annually.


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