AGG vs. ARKK: What’s The Difference?

The iShares Core U.S. Aggregate Bond ETF (AGG) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. AGG is a iShares Intermediate-Term Bond fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between AGG and ARKK? And which fund is better?

The expense ratio of AGG is 0.71 percentage points lower than ARKK’s (0.04% vs. 0.75%). AGG is mostly comprised of AAA bonds while ARKK has a high exposure to the technology sector. Overall, AGG has provided lower returns than ARKK over the past ten years.

In this article, we’ll compare AGG vs. ARKK. We’ll look at fund composition and performance, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss AGG’s and ARKK’s portfolio growth, holdings, and industry exposure and examine how these affect their overall returns.

Summary

AGG ARKK
Name iShares Core U.S. Aggregate Bond ETF ARK Innovation ETF
Category Intermediate-Term Bond Mid-Cap Growth
Issuer iShares ARK ETF Trust
AUM 88.8B 25.52B
Avg. Return 4.04% 55.45%
Div. Yield 1.95% 0.0%
Expense Ratio 0.04% 0.75%

The iShares Core U.S. Aggregate Bond ETF (AGG) is a Intermediate-Term Bond fund that is issued by iShares. It currently has 88.8B total assets under management and has yielded an average annual return of 4.04% over the past 10 years. The fund has a dividend yield of 1.95% with an expense ratio of 0.04%.

The ARK Innovation ETF (ARKK) is a Mid-Cap Growth fund that is issued by ARK ETF Trust. It currently has 25.52B total assets under management and has yielded an average annual return of 55.45% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.75%.

AGG’s dividend yield is 1.95% higher than that of ARKK (1.95% vs. 0.0%). Also, AGG yielded on average 51.41% less per year over the past decade (4.04% vs. 55.45%). The expense ratio of AGG is 0.71 percentage points lower than ARKK’s (0.04% vs. 0.75%).

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Fund Composition

Holdings

AGG - Holdings

AGG Bond Sectors Weight
AAA 68.92%
BBB 15.38%
A 11.16%
AA 2.92%
Others 1.63%
Below B 0.0%
B 0.0%
BB 0.0%
US Government 0.0%

AGG’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 68.92%, 15.38%, 11.16%, 2.92%, and 1.63%. The fund is less weighted towards Below B (0.0%), B (0.0%), and BB (0.0%) rated bonds.

ARKK - Holdings

ARKK Holdings Weight
Tesla Inc 9.56%
Roku Inc Class A 6.48%
Teladoc Health Inc 5.76%
Square Inc A 4.37%
Zoom Video Communications Inc 4.36%
Shopify Inc A 4.27%
Spotify Technology SA 3.68%
Twilio Inc A 3.66%
Coinbase Global Inc Ordinary Shares – Class A 3.65%
Unity Software Inc Ordinary Shares 3.41%

ARKK’s Top Holdings are Tesla Inc, Roku Inc Class A, Teladoc Health Inc, Square Inc A, and Zoom Video Communications Inc at 9.56%, 6.48%, 5.76%, 4.37%, and 4.36%.

Shopify Inc A (4.27%), Spotify Technology SA (3.68%), and Twilio Inc A (3.66%) have a slightly smaller but still significant weight. Coinbase Global Inc Ordinary Shares – Class A and Unity Software Inc Ordinary Shares are also represented in the ARKK’s holdings at 3.65% and 3.41%.

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Risk Analysis

AGG ARKK
Mean Return 0.28 0
R-squared 99.96 0
Std. Deviation 3.03 0
Alpha -0.08 0
Beta 1.01 0
Sharpe Ratio 0.9 0
Treynor Ratio 2.7 0

The iShares Core U.S. Aggregate Bond ETF (AGG) has a Mean Return of 0.28 with a Alpha of -0.08 and a Beta of 1.01. Its R-squared is 99.96 while AGG’s Sharpe Ratio is 0.9. Furthermore, the fund has a Treynor Ratio of 2.7 and a Standard Deviation of 3.03.

The ARK Innovation ETF (ARKK) has a Alpha of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Mean Return is 0 while ARKK’s Standard Deviation is 0. Furthermore, the fund has a Beta of 0 and a Sharpe Ratio of 0.

AGG’s Mean Return is 0.28 points higher than that of ARKK and its R-squared is 99.96 points higher. With a Standard Deviation of 3.03, AGG is slightly more volatile than ARKK. The Alpha and Beta of AGG are 0.08 points lower and 1.01 points higher than ARKK’s Alpha and Beta.

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Performance

Annual Returns

AGG vs. ARKK - Annual Returns

Year AGG ARKK
2020 7.42% 152.52%
2019 8.68% 35.73%
2018 -0.05% 3.58%
2017 3.53% 87.38%
2016 2.56% -1.96%
2015 0.48% 3.76%
2014 6.04% 0.0%
2013 -2.15% 0.0%
2012 4.04% 0.0%
2011 7.58% 0.0%
2010 6.3% 0.0%

AGG had its best year in 2019 with an annual return of 8.68%. AGG’s worst year over the past decade yielded -2.15% and occurred in 2013. In most years the iShares Core U.S. Aggregate Bond ETF provided moderate returns such as in 2017, 2012, and 2014 where annual returns amounted to 3.53%, 4.04%, and 6.04% respectively.

The year 2020 was the strongest year for ARKK, returning 152.52% on an annual basis. The poorest year for ARKK in the last ten years was 2016, with a yield of -1.96%. Most years the ARK Innovation ETF has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 3.58% respectively.

Portfolio Growth

AGG vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
AGG $10,000 $12,389 4.04%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in AGG would have resulted in a final balance of $12,389. This is a profit of $2,389 over 5 years and amounts to a compound annual growth rate (CAGR) of 4.04%.

With a $10,000 investment in ARKK, the end total would have been $65,218. This equates to a $55,218 profit over 5 years and a compound annual growth rate (CAGR) of 55.45%.

AGG’s CAGR is 51.41 percentage points lower than that of ARKK and as a result, would have yielded $52,829 less on a $10,000 investment. Thus, AGG performed worse than ARKK by 51.41% annually.


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