The Vanguard Information Technology Index Fund ETF Shares (VGT) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VGT and DFAC? And which fund is better?
The expense ratio of VGT is 0.09 percentage points lower than DFAC’s (0.1% vs. 0.19%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided higher returns than DFAC over the past ten years.
In this article, we’ll compare VGT vs. DFAC. We’ll look at fund composition and performance, as well as at their industry exposure and portfolio growth. Moreover, I’ll also discuss VGT’s and DFAC’s risk metrics, holdings, and annual returns and examine how these affect their overall returns.
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Summary
| VGT | DFAC | |
| Name | Vanguard Information Technology Index Fund ETF Shares | Dimensional U.S. Core Equity 2 ETF |
| Category | Technology | Large Blend |
| Issuer | Vanguard | Dimensional Fund Advisors |
| AUM | 54.13B | 13.53B |
| Avg. Return | 20.84% | 13.93% |
| Div. Yield | 0.66% | 1.0% |
| Expense Ratio | 0.1% | 0.19% |
The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
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%.
VGT’s dividend yield is 0.34% lower than that of DFAC (0.66% vs. 1.0%). Also, VGT yielded on average 6.90% more per year over the past decade (20.84% vs. 13.93%). The expense ratio of VGT is 0.09 percentage points lower than DFAC’s (0.1% vs. 0.19%).
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Fund Composition
Industry Exposure
| VGT | DFAC | |
| Technology | 88.89% | 22.81% |
| Industrials | 1.67% | 14.13% |
| Energy | 0.0% | 2.67% |
| Communication Services | 0.61% | 7.63% |
| Utilities | 0.0% | 1.54% |
| Healthcare | 0.0% | 12.09% |
| Consumer Defensive | 0.0% | 5.94% |
| Real Estate | 0.0% | 0.37% |
| Financial Services | 8.83% | 16.17% |
| Consumer Cyclical | 0.0% | 13.09% |
| Basic Materials | 0.0% | 3.56% |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
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%.
VGT is 66.08% more exposed to the Technology sector than DFAC (88.89% vs 22.81%). VGT’s exposure to Financial Services and Industrials stocks is 7.34% lower and 12.46% lower respectively (8.83% vs. 16.17% and 1.67% vs. 14.13%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 19.40% less of the fund’s holdings compared to DFAC (0.00% vs. 19.40%).
Holdings
| VGT Holdings | Weight |
| Apple Inc | 19.58% |
| Microsoft Corp | 16.53% |
| NVIDIA Corp | 4.22% |
| Visa Inc Class A | 3.16% |
| PayPal Holdings Inc | 2.76% |
| Mastercard Inc Class A | 2.76% |
| Adobe Inc | 2.39% |
| Intel Corp | 1.94% |
| Salesforce.com Inc | 1.91% |
| Cisco Systems Inc | 1.9% |
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
| 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
| VGT | DFAC | |
| Mean Return | 1.76 | 1.19 |
| R-squared | 74.84 | 95.1 |
| Std. Deviation | 16.61 | 15.55 |
| Alpha | 10.41 | -2.75 |
| Beta | 1.02 | 1.12 |
| Sharpe Ratio | 1.23 | 0.88 |
| Treynor Ratio | 20.55 | 11.85 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Mean Return of 1.76 with a Treynor Ratio of 20.55 and a Alpha of 10.41. Its Beta is 1.02 while VGT’s Standard Deviation is 16.61. Furthermore, the fund has a Sharpe Ratio of 1.23 and a R-squared of 74.84.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Treynor Ratio of 11.85 with a Beta of 1.12 and a Alpha of -2.75. Its R-squared is 95.1 while DFAC’s Sharpe Ratio is 0.88. Furthermore, the fund has a Mean Return of 1.19 and a Standard Deviation of 15.55.
VGT’s Mean Return is 0.57 points higher than that of DFAC and its R-squared is 20.26 points lower. With a Standard Deviation of 16.61, VGT is slightly more volatile than DFAC. The Alpha and Beta of VGT are 13.16 points higher and 0.10 points lower than DFAC’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | DFAC |
| 2020 | 45.94% | 15.8% |
| 2019 | 48.68% | 29.54% |
| 2018 | 2.52% | -9.43% |
| 2017 | 37.07% | 18.82% |
| 2016 | 13.73% | 16.31% |
| 2015 | 5.02% | -2.53% |
| 2014 | 18.01% | 9.56% |
| 2013 | 30.91% | 37.55% |
| 2012 | 14.05% | 17.93% |
| 2011 | 0.52% | -1.96% |
| 2010 | 12.74% | 21.67% |
VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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 |
| VGT | $10,000 | $72,718 | 20.84% |
| DFAC | $10,000 | $38,796 | 13.93% |
A $10,000 investment in VGT would have resulted in a final balance of $72,718. This is a profit of $62,718 over 11 years and amounts to a compound annual growth rate (CAGR) of 20.84%.
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%.
VGT’s CAGR is 6.90 percentage points higher than that of DFAC and as a result, would have yielded $33,922 more on a $10,000 investment. Thus, VGT outperformed DFAC by 6.90% annually.
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