The Vanguard Total World Stock Index Fund ETF Shares (VT) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VT and DFAC? And which fund is better?
The expense ratio of VT is 0.11 percentage points lower than DFAC’s (0.08% vs. 0.19%). VT also has a lower exposure to the technology sector and a lower standard deviation. Overall, VT has provided lower returns than DFAC over the past 11 years.
In this article, we’ll compare VT vs. DFAC. We’ll look at portfolio growth and industry exposure, as well as at their holdings and performance. Moreover, I’ll also discuss VT’s and DFAC’s risk metrics, fund composition, and annual returns and examine how these affect their overall returns.
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Summary
| VT | DFAC | |
| Name | Vanguard Total World Stock Index Fund ETF Shares | Dimensional U.S. Core Equity 2 ETF |
| Category | N/A | Large Blend |
| Issuer | Vanguard | Dimensional Fund Advisors |
| AUM | 30.44B | 13.53B |
| Avg. Return | 10.42% | 13.93% |
| Div. Yield | 1.65% | 1.0% |
| Expense Ratio | 0.08% | 0.19% |
The Vanguard Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% 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%.
VT’s dividend yield is 0.65% higher than that of DFAC (1.65% vs. 1.0%). Also, VT yielded on average 3.52% less per year over the past decade (10.42% vs. 13.93%). The expense ratio of VT is 0.11 percentage points lower than DFAC’s (0.08% vs. 0.19%).
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Fund Composition
Industry Exposure
| VT | DFAC | |
| Technology | 19.63% | 22.81% |
| Industrials | 10.7% | 14.13% |
| Energy | 3.48% | 2.67% |
| Communication Services | 9.02% | 7.63% |
| Utilities | 2.6% | 1.54% |
| Healthcare | 11.58% | 12.09% |
| Consumer Defensive | 6.71% | 5.94% |
| Real Estate | 3.64% | 0.37% |
| Financial Services | 15.36% | 16.17% |
| Consumer Cyclical | 12.32% | 13.09% |
| Basic Materials | 4.97% | 3.56% |
The Vanguard Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.
VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.
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%.
VT is 3.18% less exposed to the Technology sector than DFAC (19.63% vs 22.81%). VT’s exposure to Financial Services and Consumer Cyclical stocks is 0.81% lower and 0.77% lower respectively (15.36% vs. 16.17% and 12.32% vs. 13.09%). In total, Energy, Real Estate, and Basic Materials also make up 5.49% more of the fund’s holdings compared to DFAC (12.09% vs. 6.60%).
Holdings
| VT Holdings | Weight |
| Apple Inc | 2.85% |
| Microsoft Corp | 2.71% |
| Amazon.com Inc | 1.98% |
| Facebook Inc Class A | 1.1% |
| Alphabet Inc Class A | 0.97% |
| Alphabet Inc Class C | 0.95% |
| Tesla Inc | 0.7% |
| NVIDIA Corp | 0.64% |
| JPMorgan Chase & Co | 0.62% |
| Tencent Holdings Ltd | 0.6% |
VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.
Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.
| 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
| VT | DFAC | |
| Mean Return | 0.9 | 1.19 |
| R-squared | 99.35 | 95.1 |
| Std. Deviation | 14.19 | 15.55 |
| Alpha | 0.2 | -2.75 |
| Beta | 1.01 | 1.12 |
| Sharpe Ratio | 0.71 | 0.88 |
| Treynor Ratio | 9.5 | 11.85 |
The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Standard Deviation of 14.19 with a Treynor Ratio of 9.5 and a Alpha of 0.2. Its Sharpe Ratio is 0.71 while VT’s Beta is 1.01. Furthermore, the fund has a R-squared of 99.35 and a Mean Return of 0.9.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Beta of 1.12 with a Standard Deviation of 15.55 and a Treynor Ratio of 11.85. Its R-squared is 95.1 while DFAC’s Mean Return is 1.19. Furthermore, the fund has a Sharpe Ratio of 0.88 and a Alpha of -2.75.
VT’s Mean Return is 0.29 points lower than that of DFAC and its R-squared is 4.25 points higher. With a Standard Deviation of 14.19, VT is slightly less volatile than DFAC. The Alpha and Beta of VT are 2.95 points higher and 0.11 points lower than DFAC’s Alpha and Beta.
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Performance
Annual Returns
| Year | VT | DFAC |
| 2020 | 16.74% | 15.8% |
| 2019 | 26.8% | 29.54% |
| 2018 | -9.67% | -9.43% |
| 2017 | 24.19% | 18.82% |
| 2016 | 8.77% | 16.31% |
| 2015 | -1.88% | -2.53% |
| 2014 | 3.97% | 9.56% |
| 2013 | 22.98% | 37.55% |
| 2012 | 17.33% | 17.93% |
| 2011 | -7.71% | -1.96% |
| 2010 | 13.05% | 21.67% |
VT had its best year in 2019 with an annual return of 26.8%. VT’s worst year over the past decade yielded -9.67% and occurred in 2018. In most years the Vanguard Total World Stock Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 8.77%, 13.05%, and 16.74% 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 |
| VT | $10,000 | $27,739 | 10.42% |
| DFAC | $10,000 | $38,796 | 13.93% |
A $10,000 investment in VT would have resulted in a final balance of $27,739. This is a profit of $17,739 over 11 years and amounts to a compound annual growth rate (CAGR) of 10.42%.
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%.
VT’s CAGR is 3.52 percentage points lower than that of DFAC and as a result, would have yielded $11,057 less on a $10,000 investment. Thus, VT performed worse than DFAC by 3.52% annually.
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