The Vanguard Small-Cap Index Fund ETF Shares (VB) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VB is a Vanguard Small Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VB and DFAC? And which fund is better?
The expense ratio of VB is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%). VB also has a lower exposure to the technology sector and a higher standard deviation. Overall, VB has provided higher returns than DFAC over the past ten years.
In this article, we’ll compare VB vs. DFAC. We’ll look at industry exposure and holdings, as well as at their risk metrics and fund composition. Moreover, I’ll also discuss VB’s and DFAC’s performance, annual returns, and portfolio growth and examine how these affect their overall returns.
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|Name||Vanguard Small-Cap Index Fund ETF Shares||Dimensional U.S. Core Equity 2 ETF|
|Category||Small Blend||Large Blend|
|Issuer||Vanguard||Dimensional Fund Advisors|
The Vanguard Small-Cap Index Fund ETF Shares (VB) is a Small Blend fund that is issued by Vanguard. It currently has 137.72B total assets under management and has yielded an average annual return of 14.25% over the past 10 years. The fund has a dividend yield of 1.14% 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%.
VB’s dividend yield is 0.14% higher than that of DFAC (1.14% vs. 1.0%). Also, VB yielded on average 0.32% more per year over the past decade (14.25% vs. 13.93%). The expense ratio of VB is 0.14 percentage points lower than DFAC’s (0.05% vs. 0.19%).
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The Vanguard Small-Cap Index Fund ETF Shares (VB) has the most exposure to the Technology sector at 16.85%. This is followed by Industrials and Healthcare at 16.11% and 14.34% respectively. Communication Services (2.4%), Energy (3.67%), and Consumer Defensive (4.14%) only make up 10.21% of the fund’s total assets.
VB’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Consumer Cyclical, Financial Services, and Healthcare stocks at 4.63%, 9.56%, 13.03%, 13.06%, and 14.34%.
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%.
VB is 5.96% less exposed to the Technology sector than DFAC (16.85% vs 22.81%). VB’s exposure to Industrials and Healthcare stocks is 1.98% higher and 2.25% higher respectively (16.11% vs. 14.13% and 14.34% vs. 12.09%). In total, Communication Services, Energy, and Consumer Defensive also make up 6.03% less of the fund’s holdings compared to DFAC (10.21% vs. 16.24%).
|Charles River Laboratories International Inc||0.34%|
|Diamondback Energy Inc||0.31%|
|VICI Properties Inc Ordinary Shares||0.3%|
VB’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.34%, 0.32%, 0.32%, 0.32%, and 0.31%.
Diamondback Energy Inc (0.31%), VICI Properties Inc Ordinary Shares (0.3%), and IDEX Corp (0.3%) have a slightly smaller but still significant weight. Entegris Inc and Novavax Inc are also represented in the VB’s holdings at 0.3% and 0.29%.
|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%.
The Vanguard Small-Cap Index Fund ETF Shares (VB) has a Treynor Ratio of 10.15 with a Mean Return of 1.15 and a Alpha of -4.02. Its Beta is 1.21 while VB’s Sharpe Ratio is 0.74. Furthermore, the fund has a R-squared of 85.03 and a Standard Deviation of 17.82.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Sharpe Ratio of 0.88 with a Treynor Ratio of 11.85 and a Standard Deviation of 15.55. Its Alpha is -2.75 while DFAC’s Mean Return is 1.19. Furthermore, the fund has a Beta of 1.12 and a R-squared of 95.1.
VB’s Mean Return is 0.04 points lower than that of DFAC and its R-squared is 10.07 points lower. With a Standard Deviation of 17.82, VB is slightly more volatile than DFAC. The Alpha and Beta of VB are 1.27 points lower and 0.09 points higher than DFAC’s Alpha and Beta.
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VB had its best year in 2013 with an annual return of 37.8%. VB’s worst year over the past decade yielded -9.3% and occurred in 2018. In most years the Vanguard Small-Cap Index Fund ETF Shares provided moderate returns such as in 2017, 2012, and 2016 where annual returns amounted to 16.24%, 18.22%, and 18.31% 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 VB would have resulted in a final balance of $39,734. This is a profit of $29,734 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.25%.
With a $10,000 investment in DFAC, the end total would have been $38,796. This equates to a $28,796 profit over 11 years and a compound annual growth rate (CAGR) of 13.93%.
VB’s CAGR is 0.32 percentage points higher than that of DFAC and as a result, would have yielded $938 more on a $10,000 investment. Thus, VB outperformed DFAC by 0.32% annually.
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