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VBK vs. DFAC: What’s The Difference?

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VBK is a Vanguard Small Growth fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VBK and DFAC? And which fund is better?

The expense ratio of VBK is 0.12 percentage points lower than DFAC’s (0.07% vs. 0.19%). VBK also has a higher exposure to the technology sector and a higher standard deviation. Overall, VBK has provided higher returns than DFAC over the past 11 years.

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

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Summary

VBKDFAC
NameVanguard Small-Cap Growth Index Fund ETF SharesDimensional U.S. Core Equity 2 ETF
CategorySmall GrowthLarge Blend
IssuerVanguardDimensional Fund Advisors
AUM37.89B13.53B
Avg. Return16.53%13.93%
Div. Yield0.45%1.0%
Expense Ratio0.07%0.19%

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) is a Small Growth fund that is issued by Vanguard. It currently has 37.89B total assets under management and has yielded an average annual return of 16.53% over the past 10 years. The fund has a dividend yield of 0.45% with an expense ratio of 0.07%.

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%.

VBK’s dividend yield is 0.55% lower than that of DFAC (0.45% vs. 1.0%). Also, VBK yielded on average 2.59% more per year over the past decade (16.53% vs. 13.93%). The expense ratio of VBK is 0.12 percentage points lower than DFAC’s (0.07% vs. 0.19%).

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Fund Composition

Industry Exposure

VBK vs. DFAC - Industry Exposure

VBKDFAC
Technology27.87%22.81%
Industrials13.19%14.13%
Energy1.77%2.67%
Communication Services3.24%7.63%
Utilities0.32%1.54%
Healthcare23.24%12.09%
Consumer Defensive3.83%5.94%
Real Estate7.87%0.37%
Financial Services4.05%16.17%
Consumer Cyclical12.13%13.09%
Basic Materials2.49%3.56%

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has the most exposure to the Technology sector at 27.87%. This is followed by Healthcare and Industrials at 23.24% and 13.19% respectively. Energy (1.77%), Basic Materials (2.49%), and Communication Services (3.24%) only make up 7.50% of the fund’s total assets.

VBK’s mid-section with moderate exposure is comprised of Consumer Defensive, Financial Services, Real Estate, Consumer Cyclical, and Industrials stocks at 3.83%, 4.05%, 7.87%, 12.13%, and 13.19%.

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%.

VBK is 5.06% more exposed to the Technology sector than DFAC (27.87% vs 22.81%). VBK’s exposure to Healthcare and Industrials stocks is 11.15% higher and 0.94% lower respectively (23.24% vs. 12.09% and 13.19% vs. 14.13%). In total, Energy, Basic Materials, and Communication Services also make up 6.36% less of the fund’s holdings compared to DFAC (7.50% vs. 13.86%).

Holdings

VBK - Holdings

VBK HoldingsWeight
Charles River Laboratories International Inc0.78%
Pool Corp0.73%
Bio-Techne Corp0.73%
Avantor Inc0.73%
PerkinElmer Inc0.72%
Entegris Inc0.7%
PTC Inc0.62%
Fair Isaac Corp0.57%
Bill.com Holdings Inc Ordinary Shares0.56%
Avalara Inc0.55%

VBK’s Top Holdings are Charles River Laboratories International Inc, Pool Corp, Bio-Techne Corp, Avantor Inc, and PerkinElmer Inc at 0.78%, 0.73%, 0.73%, 0.73%, and 0.72%.

Entegris Inc (0.7%), PTC Inc (0.62%), and Fair Isaac Corp (0.57%) have a slightly smaller but still significant weight. Bill.com Holdings Inc Ordinary Shares and Avalara Inc are also represented in the VBK’s holdings at 0.56% and 0.55%.

DFAC - Holdings

DFAC HoldingsWeight
Apple Inc4.7%
Microsoft Corp3.81%
Amazon.com Inc2.39%
Johnson & Johnson1.05%
Facebook Inc Class A1.05%
JPMorgan Chase & Co1.0%
Alphabet Inc Class C0.85%
Alphabet Inc Class A0.84%
Berkshire Hathaway Inc Class B0.75%
Visa Inc Class A0.74%

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

VBKDFAC
Mean Return1.221.19
R-squared80.5695.1
Std. Deviation17.9515.55
Alpha-2.81-2.75
Beta1.181.12
Sharpe Ratio0.780.88
Treynor Ratio11.1811.85

The Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) has a Sharpe Ratio of 0.78 with a Mean Return of 1.22 and a Standard Deviation of 17.95. Its Beta is 1.18 while VBK’s Treynor Ratio is 11.18. Furthermore, the fund has a R-squared of 80.56 and a Alpha of -2.81.

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

VBK’s Mean Return is 0.03 points higher than that of DFAC and its R-squared is 14.54 points lower. With a Standard Deviation of 17.95, VBK is slightly more volatile than DFAC. The Alpha and Beta of VBK are 0.06 points lower and 0.06 points higher than DFAC’s Alpha and Beta.

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Performance

Annual Returns

VBK vs. DFAC - Annual Returns

YearVBKDFAC
202035.29%15.8%
201932.75%29.54%
2018-5.68%-9.43%
201721.9%18.82%
201610.74%16.31%
2015-2.51%-2.53%
20144.02%9.56%
201338.18%37.55%
201217.67%17.93%
2011-1.43%-1.96%
201030.87%21.67%

VBK had its best year in 2013 with an annual return of 38.18%. VBK’s worst year over the past decade yielded -5.68% and occurred in 2018. In most years the Vanguard Small-Cap Growth Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2017 where annual returns amounted to 10.74%, 17.67%, and 21.9% 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

VBK vs. DFAC - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VBK$10,000$48,63916.53%
DFAC$10,000$38,79613.93%

A $10,000 investment in VBK would have resulted in a final balance of $48,639. This is a profit of $38,639 over 11 years and amounts to a compound annual growth rate (CAGR) of 16.53%.

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%.

VBK’s CAGR is 2.59 percentage points higher than that of DFAC and as a result, would have yielded $9,843 more on a $10,000 investment. Thus, VBK outperformed DFAC by 2.59% annually.


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