USMV vs. DFAC: What’s The Difference?

The iShares MSCI USA Min Vol Factor ETF (USMV) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between USMV and DFAC? And which fund is better?

The expense ratio of USMV is 0.04 percentage points lower than DFAC’s (0.15% vs. 0.19%). USMV also has a lower exposure to the technology sector and a lower standard deviation. Overall, USMV has provided lower returns than DFAC over the past 8 years.

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

Summary

USMV DFAC
Name iShares MSCI USA Min Vol Factor ETF Dimensional U.S. Core Equity 2 ETF
Category Large Blend Large Blend
Issuer iShares Dimensional Fund Advisors
AUM 27.6B 13.53B
Avg. Return 13.89% 13.93%
Div. Yield 1.5% 1.0%
Expense Ratio 0.15% 0.19%

The iShares MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

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%.

USMV’s dividend yield is 0.50% higher than that of DFAC (1.5% vs. 1.0%). Also, USMV yielded on average 0.04% less per year over the past decade (13.89% vs. 13.93%). The expense ratio of USMV is 0.04 percentage points lower than DFAC’s (0.15% vs. 0.19%).

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Fund Composition

Industry Exposure

USMV vs. DFAC - Industry Exposure

USMV DFAC
Technology 20.53% 22.81%
Industrials 10.51% 14.13%
Energy 0.21% 2.67%
Communication Services 11.03% 7.63%
Utilities 6.93% 1.54%
Healthcare 18.42% 12.09%
Consumer Defensive 12.82% 5.94%
Real Estate 2.73% 0.37%
Financial Services 9.65% 16.17%
Consumer Cyclical 5.53% 13.09%
Basic Materials 1.65% 3.56%

The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.

USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, and 12.82%.

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%.

USMV is 2.28% less exposed to the Technology sector than DFAC (20.53% vs 22.81%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 6.33% higher and 6.88% higher respectively (18.42% vs. 12.09% and 12.82% vs. 5.94%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 7.11% less of the fund’s holdings compared to DFAC (9.91% vs. 17.02%).

Holdings

USMV - Holdings

USMV Holdings Weight
Eli Lilly and Co 1.64%
Microsoft Corp 1.62%
T-Mobile US Inc 1.51%
Accenture PLC Class A 1.51%
Visa Inc Class A 1.49%
Waste Management Inc 1.45%
Adobe Inc 1.45%
The Kroger Co 1.44%
Johnson & Johnson 1.42%
Gilead Sciences Inc 1.42%

USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.

Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.

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%.

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Risk Analysis

USMV 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 iShares MSCI USA Min Vol Factor ETF (USMV) has a Beta of 0 with a Mean Return of 0 and a Alpha of 0. Its Sharpe Ratio is 0 while USMV’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.

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

USMV’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, USMV is slightly less volatile than DFAC. The Alpha and Beta of USMV are 2.75 points higher and 1.12 points lower than DFAC’s Alpha and Beta.

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Performance

Annual Returns

USMV vs. DFAC - Annual Returns

Year USMV DFAC
2020 5.6% 15.8%
2019 27.77% 29.54%
2018 1.36% -9.43%
2017 18.97% 18.82%
2016 10.5% 16.31%
2015 5.5% -2.53%
2014 16.34% 9.56%
2013 25.11% 37.55%
2012 11.04% 17.93%
2011 0.0% -1.96%
2010 0.0% 21.67%

USMV had its best year in 2019 with an annual return of 27.77%. USMV’s worst year over the past decade yielded 0.0% and occurred in 2011. In most years the iShares MSCI USA Min Vol Factor ETF provided moderate returns such as in 2020, 2016, and 2012 where annual returns amounted to 5.6%, 10.5%, and 11.04% 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

USMV vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
USMV $10,000 $27,607 13.89%
DFAC $10,000 $27,579 13.93%

A $10,000 investment in USMV would have resulted in a final balance of $27,607. This is a profit of $17,607 over 8 years and amounts to a compound annual growth rate (CAGR) of 13.89%.

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%.

USMV’s CAGR is 0.04 percentage points lower than that of DFAC and as a result, would have yielded $28 more on a $10,000 investment. Thus, USMV performed worse than DFAC by 0.04% annually.


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