VLUE vs. DFAC: What’s The Difference?

The iShares MSCI USA Value Factor ETF (VLUE) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VLUE is a iShares Large Value fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VLUE and DFAC? And which fund is better?

The expense ratio of VLUE is 0.04 percentage points lower than DFAC’s (0.15% vs. 0.19%). VLUE also has a higher exposure to the technology sector and a lower standard deviation. Overall, VLUE has provided lower returns than DFAC over the past 7 years.

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

Summary

VLUE DFAC
Name iShares MSCI USA Value Factor ETF Dimensional U.S. Core Equity 2 ETF
Category Large Value Large Blend
Issuer iShares Dimensional Fund Advisors
AUM 15.95B 13.53B
Avg. Return 8.91% 13.93%
Div. Yield 1.89% 1.0%
Expense Ratio 0.15% 0.19%

The iShares MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

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%.

VLUE’s dividend yield is 0.89% higher than that of DFAC (1.89% vs. 1.0%). Also, VLUE yielded on average 5.02% less per year over the past decade (8.91% vs. 13.93%). The expense ratio of VLUE is 0.04 percentage points lower than DFAC’s (0.15% vs. 0.19%).

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Fund Composition

Industry Exposure

VLUE vs. DFAC - Industry Exposure

VLUE DFAC
Technology 26.89% 22.81%
Industrials 9.14% 14.13%
Energy 2.42% 2.67%
Communication Services 10.39% 7.63%
Utilities 2.68% 1.54%
Healthcare 14.31% 12.09%
Consumer Defensive 7.22% 5.94%
Real Estate 3.19% 0.37%
Financial Services 10.96% 16.17%
Consumer Cyclical 10.66% 13.09%
Basic Materials 2.14% 3.56%

The iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

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%.

VLUE is 4.08% more exposed to the Technology sector than DFAC (26.89% vs 22.81%). VLUE’s exposure to Healthcare and Financial Services stocks is 2.22% higher and 5.21% lower respectively (14.31% vs. 12.09% and 10.96% vs. 16.17%). In total, Energy, Utilities, and Real Estate also make up 3.71% more of the fund’s holdings compared to DFAC (8.29% vs. 4.58%).

Holdings

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

DFAC - Holdings

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%.

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Risk Analysis

VLUE DFAC
Mean Return 0 1.19
R-squared 0 95.1
Std. Deviation 0 15.55
Alpha 0 -2.75
Beta 0 1.12
Sharpe Ratio 0 0.88
Treynor Ratio 0 11.85

The iShares MSCI USA Value Factor ETF (VLUE) has a Beta of 0 with a Standard Deviation of 0 and a R-squared of 0. Its Alpha is 0 while VLUE’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Mean Return of 0.

The Dimensional U.S. Core Equity 2 ETF (DFAC) has a R-squared of 95.1 with a Treynor Ratio of 11.85 and a Alpha of -2.75. Its Beta is 1.12 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.

VLUE’s Mean Return is 1.19 points lower than that of DFAC and its R-squared is 95.10 points lower. With a Standard Deviation of 0, VLUE is slightly less volatile than DFAC. The Alpha and Beta of VLUE are 2.75 points higher and 1.12 points lower than DFAC’s Alpha and Beta.

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Performance

Annual Returns

VLUE vs. DFAC - Annual Returns

Year VLUE DFAC
2020 -0.32% 15.8%
2019 27.47% 29.54%
2018 -11.18% -9.43%
2017 21.97% 18.82%
2016 15.68% 16.31%
2015 -3.54% -2.53%
2014 12.29% 9.56%
2013 0.0% 37.55%
2012 0.0% 17.93%
2011 0.0% -1.96%
2010 0.0% 21.67%

VLUE had its best year in 2019 with an annual return of 27.47%. VLUE’s worst year over the past decade yielded -11.18% and occurred in 2018. In most years the iShares MSCI USA Value Factor ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% 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

VLUE vs. DFAC - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VLUE $10,000 $17,247 8.91%
DFAC $10,000 $20,050 13.93%

A $10,000 investment in VLUE would have resulted in a final balance of $17,247. This is a profit of $7,247 over 7 years and amounts to a compound annual growth rate (CAGR) of 8.91%.

With a $10,000 investment in DFAC, the end total would have been $20,050. This equates to a $10,050 profit over 7 years and a compound annual growth rate (CAGR) of 13.93%.

VLUE’s CAGR is 5.02 percentage points lower than that of DFAC and as a result, would have yielded $2,803 less on a $10,000 investment. Thus, VLUE performed worse than DFAC by 5.02% annually.


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