The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VEU and DFAC? And which fund is better?
The expense ratio of VEU is 0.11 percentage points lower than DFAC’s (0.08% vs. 0.19%). VEU also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VEU has provided lower returns than DFAC over the past ten years.
In this article, we’ll compare VEU vs. DFAC. We’ll look at portfolio growth and holdings, as well as at their performance and risk metrics. Moreover, I’ll also discuss VEU’s and DFAC’s fund composition, industry exposure, and annual returns and examine how these affect their overall returns.
Summary
| VEU | DFAC | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | Dimensional U.S. Core Equity 2 ETF |
| Category | Foreign Large Blend | Large Blend |
| Issuer | Vanguard | Dimensional Fund Advisors |
| AUM | 53.64B | 13.53B |
| Avg. Return | 6.64% | 13.93% |
| Div. Yield | 2.31% | 1.0% |
| Expense Ratio | 0.08% | 0.19% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
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%.
VEU’s dividend yield is 1.31% higher than that of DFAC (2.31% vs. 1.0%). Also, VEU yielded on average 7.29% less per year over the past decade (6.64% vs. 13.93%). The expense ratio of VEU is 0.11 percentage points lower than DFAC’s (0.08% vs. 0.19%).
Fund Composition
Industry Exposure
| VEU | DFAC | |
| Technology | 12.94% | 22.81% |
| Industrials | 12.19% | 14.13% |
| Energy | 4.69% | 2.67% |
| Communication Services | 7.44% | 7.63% |
| Utilities | 2.89% | 1.54% |
| Healthcare | 9.34% | 12.09% |
| Consumer Defensive | 8.28% | 5.94% |
| Real Estate | 3.04% | 0.37% |
| Financial Services | 18.46% | 16.17% |
| Consumer Cyclical | 12.57% | 13.09% |
| Basic Materials | 8.17% | 3.56% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
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%.
VEU is 2.29% more exposed to the Financial Services sector than DFAC (18.46% vs 16.17%). VEU’s exposure to Technology and Consumer Cyclical stocks is 9.87% lower and 0.52% lower respectively (12.94% vs. 22.81% and 12.57% vs. 13.09%). In total, Real Estate, Energy, and Communication Services also make up 4.50% more of the fund’s holdings compared to DFAC (15.17% vs. 10.67%).
Holdings
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
| 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
| VEU | DFAC | |
| Mean Return | 0.56 | 1.19 |
| R-squared | 98.44 | 95.1 |
| Std. Deviation | 15.08 | 15.55 |
| Alpha | 0.28 | -2.75 |
| Beta | 0.99 | 1.12 |
| Sharpe Ratio | 0.4 | 0.88 |
| Treynor Ratio | 5.12 | 11.85 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Mean Return of 0.56 with a Beta of 0.99 and a Alpha of 0.28. Its Standard Deviation is 15.08 while VEU’s R-squared is 98.44. Furthermore, the fund has a Treynor Ratio of 5.12 and a Sharpe Ratio of 0.4.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Beta of 1.12 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 R-squared of 95.1 and a Sharpe Ratio of 0.88.
VEU’s Mean Return is 0.63 points lower than that of DFAC and its R-squared is 3.34 points higher. With a Standard Deviation of 15.08, VEU is slightly less volatile than DFAC. The Alpha and Beta of VEU are 3.03 points higher and 0.13 points lower than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | VEU | DFAC |
| 2020 | 11.39% | 15.8% |
| 2019 | 21.63% | 29.54% |
| 2018 | -13.97% | -9.43% |
| 2017 | 27.27% | 18.82% |
| 2016 | 4.77% | 16.31% |
| 2015 | -4.67% | -2.53% |
| 2014 | -4.05% | 9.56% |
| 2013 | 14.5% | 37.55% |
| 2012 | 18.55% | 17.93% |
| 2011 | -14.25% | -1.96% |
| 2010 | 11.85% | 21.67% |
VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $18,507 | 6.64% |
| DFAC | $10,000 | $38,796 | 13.93% |
A $10,000 investment in VEU would have resulted in a final balance of $18,507. This is a profit of $8,507 over 11 years and amounts to a compound annual growth rate (CAGR) of 6.64%.
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%.
VEU’s CAGR is 7.29 percentage points lower than that of DFAC and as a result, would have yielded $20,289 less on a $10,000 investment. Thus, VEU performed worse than DFAC by 7.29% annually.
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