The Schwab U.S. TIPS ETF (SCHP) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. SCHP is a Schwab ETFs Inflation-Protected Bond fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between SCHP and DFAC? And which fund is better?
The expense ratio of SCHP is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%). SCHP is mostly comprised of AAA bonds while DFAC has a high exposure to the technology sector. Overall, SCHP has provided lower returns than DFAC over the past 10 years.
In this article, we’ll compare SCHP vs. DFAC. We’ll look at portfolio growth and industry exposure, as well as at their annual returns and performance. Moreover, I’ll also discuss SCHP’s and DFAC’s risk metrics, holdings, and fund composition and examine how these affect their overall returns.
|Name||Schwab U.S. TIPS ETF||Dimensional U.S. Core Equity 2 ETF|
|Category||Inflation-Protected Bond||Large Blend|
|Issuer||Schwab ETFs||Dimensional Fund Advisors|
The Schwab U.S. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.
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%.
SCHP’s dividend yield is 0.97% higher than that of DFAC (1.97% vs. 1.0%). Also, SCHP yielded on average 10.02% less per year over the past decade (3.92% vs. 13.93%). The expense ratio of SCHP is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%).
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|SCHP Bond Sectors||Weight|
SCHP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.
|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%.
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The Schwab U.S. TIPS ETF (SCHP) has a R-squared of 66.16 with a Standard Deviation of 4.32 and a Treynor Ratio of 2.31. Its Beta is 1.17 while SCHP’s Mean Return is 0.28. Furthermore, the fund has a Sharpe Ratio of 0.64 and a Alpha of -0.5.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a R-squared of 95.1 with a Beta of 1.12 and a Alpha of -2.75. Its Standard Deviation is 15.55 while DFAC’s Mean Return is 1.19. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Treynor Ratio of 11.85.
SCHP’s Mean Return is 0.91 points lower than that of DFAC and its R-squared is 28.94 points lower. With a Standard Deviation of 4.32, SCHP is slightly less volatile than DFAC. The Alpha and Beta of SCHP are 2.25 points higher and 0.05 points higher than DFAC’s Alpha and Beta.
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SCHP had its best year in 2011 with an annual return of 13.38%. SCHP’s worst year over the past decade yielded -8.66% and occurred in 2013. In most years the Schwab U.S. TIPS ETF provided moderate returns such as in 2017, 2014, and 2016 where annual returns amounted to 2.95%, 3.56%, and 4.6% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in SCHP would have resulted in a final balance of $14,418. This is a profit of $4,418 over 10 years and amounts to a compound annual growth rate (CAGR) of 3.92%.
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%.
SCHP’s CAGR is 10.02 percentage points lower than that of DFAC and as a result, would have yielded $17,469 less on a $10,000 investment. Thus, SCHP performed worse than DFAC by 10.02% annually.
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