The iShares Russell Mid-Cap Value ETF (IWS) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. IWS is a iShares Mid-Cap Value fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between IWS and DFAC? And which fund is better?
The expense ratio of IWS is 0.04 percentage points higher than DFAC’s (0.23% vs. 0.19%). IWS also has a lower exposure to the financial services sector and a higher standard deviation. Overall, IWS has provided lower returns than DFAC over the past 11 years.
In this article, we’ll compare IWS vs. DFAC. We’ll look at portfolio growth and annual returns, as well as at their fund composition and risk metrics. Moreover, I’ll also discuss IWS’s and DFAC’s industry exposure, performance, and holdings and examine how these affect their overall returns.
Summary
| IWS | DFAC | |
| Name | iShares Russell Mid-Cap Value ETF | Dimensional U.S. Core Equity 2 ETF |
| Category | Mid-Cap Value | Large Blend |
| Issuer | iShares | Dimensional Fund Advisors |
| AUM | 14.24B | 13.53B |
| Avg. Return | 12.35% | 13.93% |
| Div. Yield | 1.34% | 1.0% |
| Expense Ratio | 0.23% | 0.19% |
The iShares Russell Mid-Cap Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.
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%.
IWS’s dividend yield is 0.34% higher than that of DFAC (1.34% vs. 1.0%). Also, IWS yielded on average 1.59% less per year over the past decade (12.35% vs. 13.93%). The expense ratio of IWS is 0.04 percentage points higher than DFAC’s (0.23% vs. 0.19%).
Fund Composition
Industry Exposure
| IWS | DFAC | |
| Technology | 11.39% | 22.81% |
| Industrials | 14.6% | 14.13% |
| Energy | 4.71% | 2.67% |
| Communication Services | 4.08% | 7.63% |
| Utilities | 6.97% | 1.54% |
| Healthcare | 8.56% | 12.09% |
| Consumer Defensive | 4.76% | 5.94% |
| Real Estate | 11.71% | 0.37% |
| Financial Services | 15.75% | 16.17% |
| Consumer Cyclical | 12.07% | 13.09% |
| Basic Materials | 5.4% | 3.56% |
The iShares Russell Mid-Cap Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.
IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.
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%.
IWS is 0.42% less exposed to the Financial Services sector than DFAC (15.75% vs 16.17%). IWS’s exposure to Industrials and Consumer Cyclical stocks is 0.47% higher and 1.02% lower respectively (14.6% vs. 14.13% and 12.07% vs. 13.09%). In total, Energy, Consumer Defensive, and Basic Materials also make up 2.70% more of the fund’s holdings compared to DFAC (14.87% vs. 12.17%).
Holdings
| IWS Holdings | Weight |
| Twitter Inc | 0.69% |
| Marvell Technology Inc | 0.69% |
| IHS Markit Ltd | 0.62% |
| Prudential Financial Inc | 0.56% |
| Otis Worldwide Corp Ordinary Shares | 0.54% |
| International Flavors & Fragrances Inc | 0.53% |
| Xcel Energy Inc | 0.52% |
| Motorola Solutions Inc | 0.52% |
| Aptiv PLC | 0.52% |
| Aflac Inc | 0.52% |
IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.
International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.
| 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
| IWS | DFAC | |
| Mean Return | 1.06 | 1.19 |
| R-squared | 87.04 | 95.1 |
| Std. Deviation | 16.03 | 15.55 |
| Alpha | -4.11 | -2.75 |
| Beta | 1.1 | 1.12 |
| Sharpe Ratio | 0.75 | 0.88 |
| Treynor Ratio | 10.3 | 11.85 |
The iShares Russell Mid-Cap Value ETF (IWS) has a Alpha of -4.11 with a Mean Return of 1.06 and a Beta of 1.1. Its Sharpe Ratio is 0.75 while IWS’s R-squared is 87.04. Furthermore, the fund has a Treynor Ratio of 10.3 and a Standard Deviation of 16.03.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a R-squared of 95.1 with a Alpha of -2.75 and a Mean Return of 1.19. Its Standard Deviation is 15.55 while DFAC’s Treynor Ratio is 11.85. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Beta of 1.12.
IWS’s Mean Return is 0.13 points lower than that of DFAC and its R-squared is 8.06 points lower. With a Standard Deviation of 16.03, IWS is slightly more volatile than DFAC. The Alpha and Beta of IWS are 1.36 points lower and 0.02 points lower than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | IWS | DFAC |
| 2020 | 4.76% | 15.8% |
| 2019 | 26.78% | 29.54% |
| 2018 | -12.36% | -9.43% |
| 2017 | 13.1% | 18.82% |
| 2016 | 19.69% | 16.31% |
| 2015 | -4.93% | -2.53% |
| 2014 | 14.49% | 9.56% |
| 2013 | 33.11% | 37.55% |
| 2012 | 18.27% | 17.93% |
| 2011 | -1.55% | -1.96% |
| 2010 | 24.46% | 21.67% |
IWS had its best year in 2013 with an annual return of 33.11%. IWS’s worst year over the past decade yielded -12.36% and occurred in 2018. In most years the iShares Russell Mid-Cap Value ETF provided moderate returns such as in 2017, 2014, and 2012 where annual returns amounted to 13.1%, 14.49%, and 18.27% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWS | $10,000 | $33,083 | 12.35% |
| DFAC | $10,000 | $38,796 | 13.93% |
A $10,000 investment in IWS would have resulted in a final balance of $33,083. This is a profit of $23,083 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.35%.
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%.
IWS’s CAGR is 1.59 percentage points lower than that of DFAC and as a result, would have yielded $5,713 less on a $10,000 investment. Thus, IWS performed worse than DFAC by 1.59% annually.
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