DFAC vs HEGD

DFACADimensional US Core Equity 2 ETF

HEGDCSwan Hedged Equity US Large Cap ETF

In short

DFAC Dimensional's whole-market workhorse: roughly 2,600 US stocks in one ticker, run by managers who weigh federal tax consequences before they trade, at a fee closer to index funds than to active ones.

HEGD Always invested, always hedged: HEGD owns S&P 500 exposure with long-dated puts sitting under it at all times, funded partly by selling shorter options. Standing coverage, not a seasonal reset, for 0.87% a year.

Stated mandate

DFAC The fund seeks long-term capital appreciation while considering federal income-tax implications in its investment decisions.

HEGD The Fund seeks long-term capital appreciation while reducing overall market risk through a hedged U.S. large-cap equity strategy.

Why people hold it

• DFAC 0.17% a year for an actively run fund, well under the median fee among active US equity ETFs.
• About 2,600 US stocks under one ticker, so it holds the market broadly rather than a narrow slice of it.
• Federal income-tax implications sit inside the stated objective, not in a footnote, so they factor into what managers buy and sell.
• A multi-billion-dollar fund with a track record running back to 2007 and one of the strongest implementations in its peer group.

• HEGD No outcome period to track. The put hedge stays on and gets rolled by the managers, so there is no annual reset date or day-one entry math like buffer funds ask of you.swanglobalinvestments.comswanglobalinvestments.com 2
• The dampening shows up in the data: one of the lower-risk profiles among actively managed US large-cap ETFs, which is the whole point of paying for a hedge.
• Not a 2020 invention. Randy Swan has run this defined-risk approach since 1997; the ETF wrapper arrived in 2020 with the equity sleeve in plain S&P 500 index ETFs.sec.govswanglobalinvestments.com

Worth knowing

• DFAC Actively managed, so there's no published index to check it against. Holdings and tilts shift at the managers' discretion.
• Dimensional's own DFAU runs a US core equity mandate for 0.12%, a slightly lighter fee for a similar shelf.
• All stocks, all US: the mandate is capital appreciation from equities, so it takes the market's full swings, and cash arrives quarterly.

• HEGD 0.87% a year, no waiver trimming it, sits above the typical active US large-cap fee. Hedged-equity peer JHDG runs 0.49% net of a waiver through July 31, 2027.
• Hedges cost money. Swan's own shareholder reports are blunt that the fund is unlikely to capture a full up market, since the puts drag when stocks climb.sec.govsec.gov 2
• Income is incidental: distributions are annual. And you own a short list of ETFs and options rather than hundreds of individual stocks.

Full DFAC profile⁠

Full HEGD profile⁠