SCHF vs. DFAC: What’s The Difference?

The Schwab International Equity ETF (SCHF) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. SCHF is a Schwab ETFs Foreign Large Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between SCHF and DFAC? And which fund is better?

The expense ratio of SCHF is 0.13 percentage points lower than DFAC’s (0.06% vs. 0.19%). SCHF also has a higher exposure to the financial services sector and a lower standard deviation. Overall, SCHF has provided lower returns than DFAC over the past 10 years.

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

Summary

SCHF DFAC
Name Schwab International Equity ETF Dimensional U.S. Core Equity 2 ETF
Category Foreign Large Blend Large Blend
Issuer Schwab ETFs Dimensional Fund Advisors
AUM 26.99B 13.53B
Avg. Return 6.43% 13.93%
Div. Yield 2.16% 1.0%
Expense Ratio 0.06% 0.19%

The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% 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%.

SCHF’s dividend yield is 1.16% higher than that of DFAC (2.16% vs. 1.0%). Also, SCHF yielded on average 7.50% less per year over the past decade (6.43% vs. 13.93%). The expense ratio of SCHF is 0.13 percentage points lower than DFAC’s (0.06% vs. 0.19%).

Fund Composition

Industry Exposure

SCHF vs. DFAC - Industry Exposure

SCHF DFAC
Technology 11.55% 22.81%
Industrials 14.86% 14.13%
Energy 4.23% 2.67%
Communication Services 5.65% 7.63%
Utilities 3.09% 1.54%
Healthcare 11.05% 12.09%
Consumer Defensive 9.41% 5.94%
Real Estate 3.17% 0.37%
Financial Services 17.85% 16.17%
Consumer Cyclical 10.87% 13.09%
Basic Materials 8.26% 3.56%

The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

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%.

SCHF is 1.68% more exposed to the Financial Services sector than DFAC (17.85% vs 16.17%). SCHF’s exposure to Industrials and Technology stocks is 0.73% higher and 11.26% lower respectively (14.86% vs. 14.13% and 11.55% vs. 22.81%). In total, Real Estate, Energy, and Communication Services also make up 2.38% more of the fund’s holdings compared to DFAC (13.05% vs. 10.67%).

Holdings

SCHF - Holdings

SCHF Holdings Weight
Nestle SA 1.66%
Samsung Electronics Co Ltd 1.6%
ASML Holding NV 1.29%
Roche Holding AG 1.24%
Toyota Motor Corp 1.02%
LVMH Moet Hennessy Louis Vuitton SE 0.93%
Novartis AG 0.92%
Shopify Inc A 0.78%
AstraZeneca PLC 0.75%
SAP SE 0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

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

SCHF DFAC
Mean Return 0.58 1.19
R-squared 98.16 95.1
Std. Deviation 15.08 15.55
Alpha 0.53 -2.75
Beta 0.99 1.12
Sharpe Ratio 0.42 0.88
Treynor Ratio 5.39 11.85

The Schwab International Equity ETF (SCHF) has a R-squared of 98.16 with a Standard Deviation of 15.08 and a Beta of 0.99. Its Alpha is 0.53 while SCHF’s Treynor Ratio is 5.39. Furthermore, the fund has a Sharpe Ratio of 0.42 and a Mean Return of 0.58.

The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Sharpe Ratio of 0.88 with a R-squared of 95.1 and a Alpha of -2.75. Its Mean Return is 1.19 while DFAC’s Standard Deviation is 15.55. Furthermore, the fund has a Beta of 1.12 and a Treynor Ratio of 11.85.

SCHF’s Mean Return is 0.61 points lower than that of DFAC and its R-squared is 3.06 points higher. With a Standard Deviation of 15.08, SCHF is slightly less volatile than DFAC. The Alpha and Beta of SCHF are 3.28 points higher and 0.13 points lower than DFAC’s Alpha and Beta.

Performance

Annual Returns

SCHF vs. DFAC - Annual Returns

Year SCHF DFAC
2020 9.86% 15.8%
2019 22.15% 29.54%
2018 -14.39% -9.43%
2017 25.83% 18.82%
2016 2.88% 16.31%
2015 -2.44% -2.53%
2014 -4.44% 9.56%
2013 20.03% 37.55%
2012 17.12% 17.93%
2011 -12.32% -1.96%
2010 8.6% 21.67%

SCHF had its best year in 2017 with an annual return of 25.83%. SCHF’s worst year over the past decade yielded -14.39% and occurred in 2018. In most years the Schwab International Equity ETF provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.88%, 8.6%, and 9.86% 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

SCHF vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHF $10,000 $17,089 6.43%
DFAC $10,000 $31,887 13.93%

A $10,000 investment in SCHF would have resulted in a final balance of $17,089. This is a profit of $7,089 over 10 years and amounts to a compound annual growth rate (CAGR) of 6.43%.

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%.

SCHF’s CAGR is 7.50 percentage points lower than that of DFAC and as a result, would have yielded $14,798 less on a $10,000 investment. Thus, SCHF performed worse than DFAC by 7.50% annually.


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