The Schwab U.S. Dividend Equity ETF (SCHD) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between SCHD and DFAC? And which fund is better?
The expense ratio of SCHD is 0.13 percentage points lower than DFAC’s (0.06% vs. 0.19%). SCHD also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHD has provided higher returns than DFAC over the past 8 years.
In this article, we’ll compare SCHD vs. DFAC. We’ll look at portfolio growth and holdings, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss SCHD’s and DFAC’s performance, fund composition, and risk metrics and examine how these affect their overall returns.
Summary
| SCHD | DFAC | |
| Name | Schwab U.S. Dividend Equity ETF | Dimensional U.S. Core Equity 2 ETF |
| Category | Large Value | Large Blend |
| Issuer | Schwab ETFs | Dimensional Fund Advisors |
| AUM | 26B | 13.53B |
| Avg. Return | 14.80% | 13.93% |
| Div. Yield | 2.89% | 1.0% |
| Expense Ratio | 0.06% | 0.19% |
The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 0.06%.
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%.
SCHD’s dividend yield is 1.89% higher than that of DFAC (2.89% vs. 1.0%). Also, SCHD yielded on average 0.87% more per year over the past decade (14.80% vs. 13.93%). The expense ratio of SCHD is 0.13 percentage points lower than DFAC’s (0.06% vs. 0.19%).
Fund Composition
Industry Exposure
| SCHD | DFAC | |
| Technology | 16.26% | 22.81% |
| Industrials | 18.05% | 14.13% |
| Energy | 1.87% | 2.67% |
| Communication Services | 4.96% | 7.63% |
| Utilities | 0.0% | 1.54% |
| Healthcare | 12.64% | 12.09% |
| Consumer Defensive | 14.04% | 5.94% |
| Real Estate | 0.0% | 0.37% |
| Financial Services | 21.69% | 16.17% |
| Consumer Cyclical | 8.36% | 13.09% |
| Basic Materials | 2.13% | 3.56% |
The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.
SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.
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%.
SCHD is 5.52% more exposed to the Financial Services sector than DFAC (21.69% vs 16.17%). SCHD’s exposure to Industrials and Technology stocks is 3.92% higher and 6.55% lower respectively (18.05% vs. 14.13% and 16.26% vs. 22.81%). In total, Utilities, Energy, and Basic Materials also make up 3.77% less of the fund’s holdings compared to DFAC (4.00% vs. 7.77%).
Holdings
| SCHD Holdings | Weight |
| Merck & Co Inc | 4.24% |
| The Home Depot Inc | 4.19% |
| Texas Instruments Inc | 4.16% |
| Broadcom Inc | 4.15% |
| Amgen Inc | 4.11% |
| PepsiCo Inc | 4.09% |
| BlackRock Inc | 4.05% |
| Pfizer Inc | 3.97% |
| Verizon Communications Inc | 3.96% |
| Cisco Systems Inc | 3.96% |
SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.
PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.
| 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
| SCHD | DFAC | |
| Mean Return | 0 | 1.19 |
| R-squared | 0 | 95.1 |
| Std. Deviation | 0 | 15.55 |
| Alpha | 0 | -2.75 |
| Beta | 0 | 1.12 |
| Sharpe Ratio | 0 | 0.88 |
| Treynor Ratio | 0 | 11.85 |
The Schwab U.S. Dividend Equity ETF (SCHD) has a Mean Return of 0 with a Standard Deviation of 0 and a Beta of 0. Its Treynor Ratio is 0 while SCHD’s Alpha is 0. Furthermore, the fund has a R-squared of 0 and a Sharpe Ratio of 0.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Alpha of -2.75 with a R-squared of 95.1 and a Standard Deviation of 15.55. Its Sharpe Ratio is 0.88 while DFAC’s Beta is 1.12. Furthermore, the fund has a Mean Return of 1.19 and a Treynor Ratio of 11.85.
SCHD’s Mean Return is 1.19 points lower than that of DFAC and its R-squared is 95.10 points lower. With a Standard Deviation of 0, SCHD is slightly less volatile than DFAC. The Alpha and Beta of SCHD are 2.75 points higher and 1.12 points lower than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | SCHD | DFAC |
| 2020 | 15.11% | 15.8% |
| 2019 | 27.28% | 29.54% |
| 2018 | -5.46% | -9.43% |
| 2017 | 20.88% | 18.82% |
| 2016 | 16.25% | 16.31% |
| 2015 | -0.21% | -2.53% |
| 2014 | 11.66% | 9.56% |
| 2013 | 32.9% | 37.55% |
| 2012 | 11.4% | 17.93% |
| 2011 | 0.0% | -1.96% |
| 2010 | 0.0% | 21.67% |
SCHD had its best year in 2013 with an annual return of 32.9%. SCHD’s worst year over the past decade yielded -5.46% and occurred in 2018. In most years the Schwab U.S. Dividend Equity ETF provided moderate returns such as in 2012, 2014, and 2020 where annual returns amounted to 11.4%, 11.66%, and 15.11% 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 |
| SCHD | $10,000 | $28,823 | 14.80% |
| DFAC | $10,000 | $27,579 | 13.93% |
A $10,000 investment in SCHD would have resulted in a final balance of $28,823. This is a profit of $18,823 over 8 years and amounts to a compound annual growth rate (CAGR) of 14.80%.
With a $10,000 investment in DFAC, the end total would have been $27,579. This equates to a $17,579 profit over 8 years and a compound annual growth rate (CAGR) of 13.93%.
SCHD’s CAGR is 0.87 percentage points higher than that of DFAC and as a result, would have yielded $1,244 more on a $10,000 investment. Thus, SCHD outperformed DFAC by 0.87% annually.
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