The Schwab U.S. Small-Cap ETF (SCHA) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. SCHA is a Schwab ETFs Small Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between SCHA and DFAC? And which fund is better?
The expense ratio of SCHA is 0.15 percentage points lower than DFAC’s (0.04% vs. 0.19%). SCHA also has a higher exposure to the healthcare sector and a higher standard deviation. Overall, SCHA has provided lower returns than DFAC over the past 10 years.
In this article, we’ll compare SCHA vs. DFAC. We’ll look at performance and portfolio growth, as well as at their annual returns and risk metrics. Moreover, I’ll also discuss SCHA’s and DFAC’s industry exposure, fund composition, and holdings and examine how these affect their overall returns.
Summary
| SCHA | DFAC | |
| Name | Schwab U.S. Small-Cap ETF | Dimensional U.S. Core Equity 2 ETF |
| Category | Small Blend | Large Blend |
| Issuer | Schwab ETFs | Dimensional Fund Advisors |
| AUM | 16.51B | 13.53B |
| Avg. Return | 12.62% | 13.93% |
| Div. Yield | 0.98% | 1.0% |
| Expense Ratio | 0.04% | 0.19% |
The Schwab U.S. Small-Cap ETF (SCHA) is a Small Blend fund that is issued by Schwab ETFs. It currently has 16.51B total assets under management and has yielded an average annual return of 12.62% over the past 10 years. The fund has a dividend yield of 0.98% with an expense ratio of 0.04%.
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%.
SCHA’s dividend yield is 0.02% lower than that of DFAC (0.98% vs. 1.0%). Also, SCHA yielded on average 1.31% less per year over the past decade (12.62% vs. 13.93%). The expense ratio of SCHA is 0.15 percentage points lower than DFAC’s (0.04% vs. 0.19%).
Fund Composition
Industry Exposure
| SCHA | DFAC | |
| Technology | 14.91% | 22.81% |
| Industrials | 15.37% | 14.13% |
| Energy | 3.35% | 2.67% |
| Communication Services | 3.5% | 7.63% |
| Utilities | 1.83% | 1.54% |
| Healthcare | 16.5% | 12.09% |
| Consumer Defensive | 3.75% | 5.94% |
| Real Estate | 7.83% | 0.37% |
| Financial Services | 14.49% | 16.17% |
| Consumer Cyclical | 14.48% | 13.09% |
| Basic Materials | 3.98% | 3.56% |
The Schwab U.S. Small-Cap ETF (SCHA) has the most exposure to the Healthcare sector at 16.5%. This is followed by Industrials and Technology at 15.37% and 14.91% respectively. Energy (3.35%), Communication Services (3.5%), and Consumer Defensive (3.75%) only make up 10.60% of the fund’s total assets.
SCHA’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Technology stocks at 3.98%, 7.83%, 14.48%, 14.49%, and 14.91%.
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%.
SCHA is 4.41% more exposed to the Healthcare sector than DFAC (16.5% vs 12.09%). SCHA’s exposure to Industrials and Technology stocks is 1.24% higher and 7.90% lower respectively (15.37% vs. 14.13% and 14.91% vs. 22.81%). In total, Energy, Communication Services, and Consumer Defensive also make up 5.64% less of the fund’s holdings compared to DFAC (10.60% vs. 16.24%).
Holdings
| SCHA Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 0.67% |
| Caesars Entertainment Inc | 0.51% |
| Cloudflare Inc | 0.48% |
| NovoCure Ltd | 0.45% |
| Plug Power Inc | 0.41% |
| 10x Genomics Inc Ordinary Shares – Class A | 0.34% |
| GameStop Corp Class A | 0.28% |
| RH | 0.27% |
| Penn National Gaming Inc | 0.27% |
| Axon Enterprise Inc | 0.27% |
SCHA’s Top Holdings are AMC Entertainment Holdings Inc Class A, Caesars Entertainment Inc, Cloudflare Inc, NovoCure Ltd, and Plug Power Inc at 0.67%, 0.51%, 0.48%, 0.45%, and 0.41%.
10x Genomics Inc Ordinary Shares – Class A (0.34%), GameStop Corp Class A (0.28%), and RH (0.27%) have a slightly smaller but still significant weight. Penn National Gaming Inc and Axon Enterprise Inc are also represented in the SCHA’s holdings at 0.27% and 0.27%.
| 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
| SCHA | DFAC | |
| Mean Return | 1.14 | 1.19 |
| R-squared | 82.26 | 95.1 |
| Std. Deviation | 18.68 | 15.55 |
| Alpha | -4.65 | -2.75 |
| Beta | 1.25 | 1.12 |
| Sharpe Ratio | 0.7 | 0.88 |
| Treynor Ratio | 9.62 | 11.85 |
The Schwab U.S. Small-Cap ETF (SCHA) has a Alpha of -4.65 with a Sharpe Ratio of 0.7 and a Treynor Ratio of 9.62. Its Beta is 1.25 while SCHA’s R-squared is 82.26. Furthermore, the fund has a Standard Deviation of 18.68 and a Mean Return of 1.14.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Treynor Ratio of 11.85 with a Alpha of -2.75 and a R-squared of 95.1. Its Mean Return is 1.19 while DFAC’s Sharpe Ratio is 0.88. Furthermore, the fund has a Beta of 1.12 and a Standard Deviation of 15.55.
SCHA’s Mean Return is 0.05 points lower than that of DFAC and its R-squared is 12.84 points lower. With a Standard Deviation of 18.68, SCHA is slightly more volatile than DFAC. The Alpha and Beta of SCHA are 1.90 points lower and 0.13 points higher than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHA | DFAC |
| 2020 | 19.35% | 15.8% |
| 2019 | 26.54% | 29.54% |
| 2018 | -11.75% | -9.43% |
| 2017 | 15.04% | 18.82% |
| 2016 | 19.88% | 16.31% |
| 2015 | -4.24% | -2.53% |
| 2014 | 6.53% | 9.56% |
| 2013 | 39.59% | 37.55% |
| 2012 | 18.24% | 17.93% |
| 2011 | -2.95% | -1.96% |
| 2010 | 28.31% | 21.67% |
SCHA had its best year in 2013 with an annual return of 39.59%. SCHA’s worst year over the past decade yielded -11.75% and occurred in 2018. In most years the Schwab U.S. Small-Cap ETF provided moderate returns such as in 2017, 2012, and 2020 where annual returns amounted to 15.04%, 18.24%, and 19.35% 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 |
| SCHA | $10,000 | $30,035 | 12.62% |
| DFAC | $10,000 | $31,887 | 13.93% |
A $10,000 investment in SCHA would have resulted in a final balance of $30,035. This is a profit of $20,035 over 10 years and amounts to a compound annual growth rate (CAGR) of 12.62%.
With a $10,000 investment in DFAC, the end total would have been $31,887. This equates to a $21,887 profit over 10 years and a compound annual growth rate (CAGR) of 13.93%.
SCHA’s CAGR is 1.31 percentage points lower than that of DFAC and as a result, would have yielded $1,852 less on a $10,000 investment. Thus, SCHA performed worse than DFAC by 1.31% annually.
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