The Vanguard Growth Index Fund ETF Shares (VUG) and the Dimensional U.S. Core Equity 2 ETF (DFAC) are both among the Top 100 ETFs. VUG is a Vanguard Large Growth fund and DFAC is a Dimensional Fund Advisors Large Blend fund. So, what’s the difference between VUG and DFAC? And which fund is better?
The expense ratio of VUG is 0.15 percentage points lower than DFAC’s (0.04% vs. 0.19%). VUG also has a higher exposure to the technology sector and a lower standard deviation. Overall, VUG has provided higher returns than DFAC over the past ten years.
In this article, we’ll compare VUG vs. DFAC. We’ll look at fund composition and performance, as well as at their portfolio growth and holdings. Moreover, I’ll also discuss VUG’s and DFAC’s annual returns, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| VUG | DFAC | |
| Name | Vanguard Growth Index Fund ETF Shares | Dimensional U.S. Core Equity 2 ETF |
| Category | Large Growth | Large Blend |
| Issuer | Vanguard | Dimensional Fund Advisors |
| AUM | 165.53B | 13.53B |
| Avg. Return | 17.58% | 13.93% |
| Div. Yield | 0.57% | 1.0% |
| Expense Ratio | 0.04% | 0.19% |
The Vanguard Growth Index Fund ETF Shares (VUG) is a Large Growth fund that is issued by Vanguard. It currently has 165.53B total assets under management and has yielded an average annual return of 17.58% over the past 10 years. The fund has a dividend yield of 0.57% 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%.
VUG’s dividend yield is 0.43% lower than that of DFAC (0.57% vs. 1.0%). Also, VUG yielded on average 3.65% more per year over the past decade (17.58% vs. 13.93%). The expense ratio of VUG is 0.15 percentage points lower than DFAC’s (0.04% vs. 0.19%).
Fund Composition
Industry Exposure
| VUG | DFAC | |
| Technology | 39.05% | 22.81% |
| Industrials | 5.13% | 14.13% |
| Energy | 0.32% | 2.67% |
| Communication Services | 16.49% | 7.63% |
| Utilities | 0.0% | 1.54% |
| Healthcare | 8.09% | 12.09% |
| Consumer Defensive | 2.41% | 5.94% |
| Real Estate | 2.46% | 0.37% |
| Financial Services | 6.75% | 16.17% |
| Consumer Cyclical | 17.78% | 13.09% |
| Basic Materials | 1.52% | 3.56% |
The Vanguard Growth Index Fund ETF Shares (VUG) has the most exposure to the Technology sector at 39.05%. This is followed by Consumer Cyclical and Communication Services at 17.78% and 16.49% respectively. Energy (0.32%), Basic Materials (1.52%), and Consumer Defensive (2.41%) only make up 4.25% of the fund’s total assets.
VUG’s mid-section with moderate exposure is comprised of Real Estate, Industrials, Financial Services, Healthcare, and Communication Services stocks at 2.46%, 5.13%, 6.75%, 8.09%, and 16.49%.
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%.
VUG is 16.24% more exposed to the Technology sector than DFAC (39.05% vs 22.81%). VUG’s exposure to Consumer Cyclical and Communication Services stocks is 4.69% higher and 8.86% higher respectively (17.78% vs. 13.09% and 16.49% vs. 7.63%). In total, Energy, Basic Materials, and Consumer Defensive also make up 7.92% less of the fund’s holdings compared to DFAC (4.25% vs. 12.17%).
Holdings
| VUG Holdings | Weight |
| Apple Inc | 10.13% |
| Microsoft Corp | 9.52% |
| Amazon.com Inc | 6.88% |
| Facebook Inc Class A | 3.89% |
| Alphabet Inc Class A | 3.43% |
| Alphabet Inc Class C | 3.22% |
| Tesla Inc | 2.44% |
| NVIDIA Corp | 2.21% |
| Visa Inc Class A | 1.78% |
| PayPal Holdings Inc | 1.6% |
VUG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.13%, 9.52%, 6.88%, 3.89%, and 3.43%.
Alphabet Inc Class C (3.22%), Tesla Inc (2.44%), and NVIDIA Corp (2.21%) have a slightly smaller but still significant weight. Visa Inc Class A and PayPal Holdings Inc are also represented in the VUG’s holdings at 1.78% and 1.6%.
| 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
| VUG | DFAC | |
| Mean Return | 1.44 | 1.19 |
| R-squared | 92.48 | 95.1 |
| Std. Deviation | 14.76 | 15.55 |
| Alpha | 1.81 | -2.75 |
| Beta | 1.04 | 1.12 |
| Sharpe Ratio | 1.13 | 0.88 |
| Treynor Ratio | 16.13 | 11.85 |
The Vanguard Growth Index Fund ETF Shares (VUG) has a R-squared of 92.48 with a Treynor Ratio of 16.13 and a Alpha of 1.81. Its Standard Deviation is 14.76 while VUG’s Beta is 1.04. Furthermore, the fund has a Mean Return of 1.44 and a Sharpe Ratio of 1.13.
The Dimensional U.S. Core Equity 2 ETF (DFAC) has a Mean Return of 1.19 with a Sharpe Ratio of 0.88 and a R-squared of 95.1. Its Standard Deviation is 15.55 while DFAC’s Treynor Ratio is 11.85. Furthermore, the fund has a Alpha of -2.75 and a Beta of 1.12.
VUG’s Mean Return is 0.25 points higher than that of DFAC and its R-squared is 2.62 points lower. With a Standard Deviation of 14.76, VUG is slightly less volatile than DFAC. The Alpha and Beta of VUG are 4.56 points higher and 0.08 points lower than DFAC’s Alpha and Beta.
Performance
Annual Returns
| Year | VUG | DFAC |
| 2020 | 40.16% | 15.8% |
| 2019 | 37.26% | 29.54% |
| 2018 | -3.32% | -9.43% |
| 2017 | 27.8% | 18.82% |
| 2016 | 6.13% | 16.31% |
| 2015 | 3.32% | -2.53% |
| 2014 | 13.62% | 9.56% |
| 2013 | 32.38% | 37.55% |
| 2012 | 17.03% | 17.93% |
| 2011 | 1.87% | -1.96% |
| 2010 | 17.11% | 21.67% |
VUG had its best year in 2020 with an annual return of 40.16%. VUG’s worst year over the past decade yielded -3.32% and occurred in 2018. In most years the Vanguard Growth Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.62%, 17.03%, and 17.11% 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 |
| VUG | $10,000 | $54,735 | 17.58% |
| DFAC | $10,000 | $38,796 | 13.93% |
A $10,000 investment in VUG would have resulted in a final balance of $54,735. This is a profit of $44,735 over 11 years and amounts to a compound annual growth rate (CAGR) of 17.58%.
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%.
VUG’s CAGR is 3.65 percentage points higher than that of DFAC and as a result, would have yielded $15,939 more on a $10,000 investment. Thus, VUG outperformed DFAC by 3.65% annually.
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