The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VIG is a Vanguard Large Blend fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VIG and DFAC? And which fund is better?
The expense ratio of VIG is 0.13 percentage points lower than DFAC’s (0.06% vs. 0.19%). VIG also has a higher exposure to the industrials sector and a lower standard deviation. Overall, VIG has provided lower returns than DFAC over the past ten years.
In this article, we’ll compare VIG vs. DFAC. We’ll look at industry exposure and performance, as well as at their annual returns and holdings. Moreover, I’ll also discuss VIG’s and DFAC’s fund composition, risk metrics, and portfolio growth and examine how these affect their overall returns.
Summary
| VIG | DFAC | |
| NameVanguard Dividend Appreciation Index Fund ETF SharesDimensional U.S. Core Equity 2 ETF | ||
| Category | Large Blend | Large Blend |
| Issuer | Vanguard | Dimensional Fund Advisors |
| AUM | 71.92B | 13.53B |
| Avg. Return | 13.35% | 13.93% |
| Div. Yield | 1.56% | 1.0% |
| Expense Ratio | 0.06% | 0.19% |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) is a Large Blend fund that is issued by Vanguard. It currently has 71.92B total assets under management and has yielded an average annual return of 13.35% over the past 10 years. The fund has a dividend yield of 1.56% with an expense ratio of 0.06%.
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%.
VIG’s dividend yield is 0.56% higher than that of DFAC (1.56% vs. 1.0%). Also, VIG yielded on average 0.59% less per year over the past decade (13.35% vs. 13.93%). The expense ratio of VIG is 0.13 percentage points lower than DFAC’s (0.06% vs. 0.19%).
Fund Composition
Industry Exposure
| VIG | DFAC | |
| Technology | 14.93% | 22.81% |
| Industrials | 17.23% | 14.13% |
| Energy | 0.0% | 2.67% |
| Communication Services | 2.86% | 7.63% |
| Utilities | 2.81% | 1.54% |
| Healthcare | 15.52% | 12.09% |
| Consumer Defensive | 15.32% | 5.94% |
| Real Estate | 0.0% | 0.37% |
| Financial Services | 17.18% | 16.17% |
| Consumer Cyclical | 10.47% | 13.09% |
| Basic Materials | 3.67% | 3.56% |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has the most exposure to the Industrials sector at 17.23%. This is followed by Financial Services and Healthcare at 17.18% and 15.52% respectively. Energy (0.0%), Utilities (2.81%), and Communication Services (2.86%) only make up 5.67% of the fund’s total assets.
VIG’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Cyclical, Technology, Consumer Defensive, and Healthcare stocks at 3.67%, 10.47%, 14.93%, 15.32%, and 15.52%.
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%.
VIG is 3.10% more exposed to the Industrials sector than DFAC (17.23% vs 14.13%). VIG’s exposure to Financial Services and Healthcare stocks is 1.01% higher and 3.43% higher respectively (17.18% vs. 16.17% and 15.52% vs. 12.09%). In total, Energy, Utilities, and Communication Services also make up 6.17% less of the fund’s holdings compared to DFAC (5.67% vs. 11.84%).
Holdings
| VIG Holdings | Weight |
| Microsoft Corp | 4.19% |
| JPMorgan Chase & Co | 3.8% |
| Johnson & Johnson | 3.67% |
| Walmart Inc | 3.38% |
| Visa Inc Class A | 3.22% |
| UnitedHealth Group Inc | 3.22% |
| The Home Depot Inc | 2.91% |
| Procter & Gamble Co | 2.82% |
| Comcast Corp Class A | 2.21% |
| Coca-Cola Co | 1.98% |
VIG’s Top Holdings are Microsoft Corp, JPMorgan Chase & Co, Johnson & Johnson, Walmart Inc, and Visa Inc Class A at 4.19%, 3.8%, 3.67%, 3.38%, and 3.22%.
UnitedHealth Group Inc (3.22%), The Home Depot Inc (2.91%), and Procter & Gamble Co (2.82%) have a slightly smaller but still significant weight. Comcast Corp Class A and Coca-Cola Co are also represented in the VIG’s holdings at 2.21% and 1.98%.
| 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
| VIG | DFAC | |
| Mean Return | 1.09 | 1.19 |
| R-squared | 92.2 | 95.1 |
| Std. Deviation | 12.25 | 15.55 |
| Alpha | 0.12 | -2.75 |
| Beta | 0.86 | 1.12 |
| Sharpe Ratio | 1.01 | 0.88 |
| Treynor Ratio | 14.33 | 11.85 |
The Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) has a R-squared of 92.2 with a Mean Return of 1.09 and a Alpha of 0.12. Its Beta is 0.86 while VIG’s Sharpe Ratio is 1.01. Furthermore, the fund has a Standard Deviation of 12.25 and a Treynor Ratio of 14.33.
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 Sharpe Ratio is 0.88 while DFAC’s Beta is 1.12. Furthermore, the fund has a R-squared of 95.1 and a Treynor Ratio of 11.85.
VIG’s Mean Return is 0.10 points lower than that of DFAC and its R-squared is 2.90 points lower. With a Standard Deviation of 12.25, VIG is slightly less volatile than DFAC. The Alpha and Beta of VIG are 2.87 points higher and 0.26 points lower than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | VIG | DFAC |
| 2020 | 15.46% | 15.8% |
| 2019 | 29.71% | 29.54% |
| 2018 | -2.02% | -9.43% |
| 2017 | 22.22% | 18.82% |
| 2016 | 11.84% | 16.31% |
| 2015 | -1.95% | -2.53% |
| 2014 | 10.06% | 9.56% |
| 2013 | 28.99% | 37.55% |
| 2012 | 11.61% | 17.93% |
| 2011 | 6.21% | -1.96% |
| 2010 | 14.67% | 21.67% |
VIG had its best year in 2019 with an annual return of 29.71%. VIG’s worst year over the past decade yielded -2.02% and occurred in 2018. In most years the Vanguard Dividend Appreciation Index Fund ETF Shares provided moderate returns such as in 2012, 2016, and 2010 where annual returns amounted to 11.61%, 11.84%, and 14.67% 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 |
| VIG | $10,000 | $37,951 | 13.35% |
| DFAC | $10,000 | $38,796 | 13.93% |
A $10,000 investment in VIG would have resulted in a final balance of $37,951. This is a profit of $27,951 over 11 years and amounts to a compound annual growth rate (CAGR) of 13.35%.
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%.
VIG’s CAGR is 0.59 percentage points lower than that of DFAC and as a result, would have yielded $845 less on a $10,000 investment. Thus, VIG performed worse than DFAC by 0.59% annually.
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