The Vanguard Value Index Fund ETF Shares (VTV) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VTV and DFAC? And which fund is better?
The expense ratio of VTV is 0.15 percentage points lower than DFAC’s (0.04% vs. 0.19%). VTV also has a higher exposure to the financial services sector and a lower standard deviation. Overall, VTV has provided lower returns than DFAC over the past ten years.
In this article, we’ll compare VTV vs. DFAC. We’ll look at fund composition and annual returns, as well as at their portfolio growth and performance. Moreover, I’ll also discuss VTV’s and DFAC’s holdings, industry exposure, and risk metrics and examine how these affect their overall returns.
|Name||Vanguard Value Index Fund ETF Shares||Dimensional U.S. Core Equity 2 ETF|
|Category||Large Value||Large Blend|
|Issuer||Vanguard||Dimensional Fund Advisors|
The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% 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%.
VTV’s dividend yield is 1.15% higher than that of DFAC (2.15% vs. 1.0%). Also, VTV yielded on average 1.86% less per year over the past decade (12.07% vs. 13.93%). The expense ratio of VTV is 0.15 percentage points lower than DFAC’s (0.04% vs. 0.19%).
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The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.
VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.
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%.
VTV is 6.64% more exposed to the Financial Services sector than DFAC (22.81% vs 16.17%). VTV’s exposure to Healthcare and Industrials stocks is 7.75% higher and 1.52% lower respectively (19.84% vs. 12.09% and 12.61% vs. 14.13%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 2.83% less of the fund’s holdings compared to DFAC (12.17% vs. 15.00%).
|Berkshire Hathaway Inc Class B||2.98%|
|JPMorgan Chase & Co||2.82%|
|Johnson & Johnson||2.6%|
|UnitedHealth Group Inc||2.27%|
|Procter & Gamble Co||1.98%|
|Bank of America Corp||1.91%|
|Exxon Mobil Corp||1.6%|
|Comcast Corp Class A||1.57%|
|Verizon Communications Inc||1.32%|
VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.
Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.
|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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The Vanguard Value Index Fund ETF Shares (VTV) has a Mean Return of 1.05 with a Standard Deviation of 13.78 and a Sharpe Ratio of 0.87. Its Beta is 0.98 while VTV’s R-squared is 92.61. Furthermore, the fund has a Treynor Ratio of 11.94 and a Alpha of -1.92.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Treynor Ratio of 11.85 with a Alpha of -2.75 and a Standard Deviation of 15.55. Its Beta is 1.12 while DFAC’s Mean Return is 1.19. Furthermore, the fund has a R-squared of 95.1 and a Sharpe Ratio of 0.88.
VTV’s Mean Return is 0.14 points lower than that of DFAC and its R-squared is 2.49 points lower. With a Standard Deviation of 13.78, VTV is slightly less volatile than DFAC. The Alpha and Beta of VTV are 0.83 points higher and 0.14 points lower than DFAC’s Alpha and Beta.
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VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VTV would have resulted in a final balance of $33,163. This is a profit of $23,163 over 11 years and amounts to a compound annual growth rate (CAGR) of 12.07%.
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%.
VTV’s CAGR is 1.86 percentage points lower than that of DFAC and as a result, would have yielded $5,633 less on a $10,000 investment. Thus, VTV performed worse than DFAC by 1.86% annually.
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