DFAT vs VTV

DFATCDimensional US Targeted Value ETF

VTVAVanguard Morningstar Value ETF

In short

DFAT A 1998-vintage tax-managed value strategy that became an ETF in 2021. Dimensional buys roughly 1,500 cheap-looking US small and mid caps with healthier profits, and runs the whole thing with one eye on your tax bill.

VTV Value investing for three cents on every hundred dollars a year. Since 2004, VTV has run a passive, fully invested portfolio of roughly 300 large US companies that screen cheap, at a fee near the industry floor.

Stated mandate

DFAT The fund seeks long-term capital appreciation while minimizing federal income taxes on its returns.

VTV The fund seeks to track a large-capitalization U.S. value-stock benchmark through passive indexing and substantial replication of that index.

Why people hold it

• DFAT The mandate is unusual for a value fund: alongside long-term capital appreciation, the stated objective names minimizing federal income taxes on returns.dimensional.com
• Roughly 1,500 small and mid caps, picked on low price relative to book value plus higher profitability, then weighted by size. Breadth does the work, not concentrated bets.dimensional.com
• The strategy predates the wrapper. It ran as a Dimensional tax-managed mutual fund from 1998 and converted in the industry's largest mutual-fund-to-ETF switch in 2021.dimensional.comsec.gov

• VTV 0.03% a year, about a sixth of the 0.18% median for US value funds. Cost is the part of the outcome the fund actually controls.
• Same recipe, very different sticker: PRXV tracks the same declared value index and charges 0.36%, twelve times VTV's fee.
• Passively managed, full replication, fully invested. No manager hunches, no cash sitting idle, and the fund has tracked its benchmark closely.vanguard.com
• One of the largest and most actively traded funds in the US value aisle, the kind of scale that keeps bid-ask spreads thin for ordinary orders.

Worth knowing

• DFAT At 0.28%, it costs more than the typical US value ETF and several times index trackers like VTV (0.03%) or VTWV (0.06%). Active screening is what the extra buys.
• There's no index to score it against. Dimensional runs this actively, so assessing it means assessing the process, not tracking error.dimensional.com
• Small and mid caps sit at the center here, so it can behave quite differently from large-cap value peers like VTV over any given stretch.dimensional.com

• VTV Large caps only, about 300 of them. Cheap mid- and small-cap stocks live in separate funds (VOE, VTWV), so this is one slice of value, not the whole market.
• It is a value screen by design, so the priciest fast growers are largely filtered out. In growth-led stretches it can move very differently from a total-market fund.
• Income arrives quarterly, in four instalments rather than a monthly drip.

Full DFAT profile⁠

Full VTV profile⁠