Is DFAC ETF Still A Buy After 15% Run?

"DFAC manages nearly $40 billion using a strategy that tilts toward smaller companies while maintaining mega-cap tech exposure. The fund's top three holdings are NVIDIA Corporation ( NASDAQ:NVDA), Microsoft Corporation ( NASDAQ:MSFT), and Apple Inc. ( NASDAQ:AAPL), representing nearly 16% of assets. Information technology accounts for 26% of the portfolio. This isn't a pure small-cap fund-it's a core equity strategy that leans into factor premiums when available but doesn't abandon the market's growth engines."

"Small companies often rely on floating-rate debt, so they benefit when short-term rates fall. But rising long-term yields shrink the present value of future earnings, particularly for unprofitable companies. About 40% of Russell 2000 stocks didn't turn a profit over the past year, according to Apollo Global Management ( NYSE:APO). DFAC's factor screens help avoid the worst offenders, but the fund still holds plenty of smaller firms whose valuations depend on optimistic growth assumptions."

DFAC returned about 15% over the past year, roughly matching the S&P 500. The fund manages nearly $40 billion and tilts toward smaller companies while retaining significant mega-cap technology exposure. Top holdings NVIDIA, Microsoft, and Apple account for nearly 16% of assets, and information technology represents 26% of the portfolio. Small-cap stocks are especially sensitive to interest rates: short-term rate cuts aid firms with floating-rate debt, while rising long-term Treasury yields reduce present values of future earnings for growth-dependent or unprofitable companies. About 40% of Russell 2000 firms were unprofitable last year, increasing vulnerability. Weekly monitoring of the 10-year yield is advised, with levels above 4.2% likely to turn DFAC's small-cap tilt into a headwind.

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