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VO vs. DFAC: What’s The Difference?

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

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

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

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Summary

VODFAC
NameVanguard Mid-Cap Index Fund ETF SharesDimensional U.S. Core Equity 2 ETF
CategoryMid-Cap BlendLarge Blend
IssuerVanguardDimensional Fund Advisors
AUM154.08B13.53B
Avg. Return14.34%13.93%
Div. Yield1.23%1.0%
Expense Ratio0.04%0.19%

The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.

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%.

VO’s dividend yield is 0.23% higher than that of DFAC (1.23% vs. 1.0%). Also, VO yielded on average 0.40% more per year over the past decade (14.34% vs. 13.93%). The expense ratio of VO is 0.15 percentage points lower than DFAC’s (0.04% vs. 0.19%).

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Fund Composition

Industry Exposure

VO vs. DFAC - Industry Exposure

VODFAC
Technology22.01%22.81%
Industrials11.92%14.13%
Energy3.82%2.67%
Communication Services5.61%7.63%
Utilities5.12%1.54%
Healthcare13.03%12.09%
Consumer Defensive3.25%5.94%
Real Estate8.67%0.37%
Financial Services11.08%16.17%
Consumer Cyclical12.12%13.09%
Basic Materials3.36%3.56%

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.

VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.

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%.

VO is 0.80% less exposed to the Technology sector than DFAC (22.01% vs 22.81%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 0.94% higher and 0.97% lower respectively (13.03% vs. 12.09% and 12.12% vs. 13.09%). In total, Basic Materials, Energy, and Utilities also make up 4.53% more of the fund’s holdings compared to DFAC (12.30% vs. 7.77%).

Holdings

VO - Holdings

VO HoldingsWeight
IDEXX Laboratories Inc0.78%
DocuSign Inc0.75%
Marvell Technology Inc0.68%
IQVIA Holdings Inc0.68%
Chipotle Mexican Grill Inc0.63%
Veeva Systems Inc Class A0.62%
Digital Realty Trust Inc0.62%
Centene Corp0.62%
Aptiv PLC0.62%
Carrier Global Corp Ordinary Shares0.61%

VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.

Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.

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

VODFAC
Mean Return1.141.19
R-squared92.2295.1
Std. Deviation15.6515.55
Alpha-2.71-2.75
Beta1.111.12
Sharpe Ratio0.830.88
Treynor Ratio11.3211.85

The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a R-squared of 92.22 with a Alpha of -2.71 and a Mean Return of 1.14. Its Sharpe Ratio is 0.83 while VO’s Beta is 1.11. Furthermore, the fund has a Standard Deviation of 15.65 and a Treynor Ratio of 11.32.

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

VO’s Mean Return is 0.05 points lower than that of DFAC and its R-squared is 2.88 points lower. With a Standard Deviation of 15.65, VO is slightly more volatile than DFAC. The Alpha and Beta of VO are 0.04 points higher and 0.01 points lower than DFAC’s Alpha and Beta.

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Performance

Annual Returns

VO vs. DFAC - Annual Returns

YearVODFAC
202018.22%15.8%
201931.04%29.54%
2018-9.21%-9.43%
201719.25%18.82%
201611.23%16.31%
2015-1.34%-2.53%
201413.76%9.56%
201335.15%37.55%
201215.98%17.93%
2011-1.96%-1.96%
201025.57%21.67%

VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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

VO vs. DFAC - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VO$10,000$40,40414.34%
DFAC$10,000$38,79613.93%

A $10,000 investment in VO would have resulted in a final balance of $40,404. This is a profit of $30,404 over 11 years and amounts to a compound annual growth rate (CAGR) of 14.34%.

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%.

VO’s CAGR is 0.40 percentage points higher than that of DFAC and as a result, would have yielded $1,608 more on a $10,000 investment. Thus, VO outperformed DFAC by 0.40% annually.


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