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ARKK vs. BIV: What’s The Difference?

The ARK Innovation ETF (ARKK) and the Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) are both among the Top 100 ETFs. ARKK is a ARK ETF Trust Mid-Cap Growth fund and BIV is a Vanguard Intermediate-Term Bond fund. So, what’s the difference between ARKK and BIV? And which fund is better?

The expense ratio of ARKK is 0.70 percentage points higher than BIV’s (0.75% vs. 0.05%). ARKK also has a high exposure to the technology sector while BIV is mostly comprised of AAA bonds. Overall, ARKK has provided higher returns than BIV over the past 5 years.

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

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Summary

ARKKBIV
NameARK Innovation ETFVanguard Intermediate-Term Bond Index Fund ETF Shares
CategoryMid-Cap GrowthIntermediate-Term Bond
IssuerARK ETF TrustVanguard
AUM25.52B39.05B
Avg. Return55.45%5.31%
Div. Yield0.0%2.06%
Expense Ratio0.75%0.05%

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%.

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) is a Intermediate-Term Bond fund that is issued by Vanguard. It currently has 39.05B total assets under management and has yielded an average annual return of 5.31% over the past 10 years. The fund has a dividend yield of 2.06% with an expense ratio of 0.05%.

ARKK’s dividend yield is 2.06% lower than that of BIV (0.0% vs. 2.06%). Also, ARKK yielded on average 50.14% more per year over the past decade (55.45% vs. 5.31%). The expense ratio of ARKK is 0.70 percentage points higher than BIV’s (0.75% vs. 0.05%).

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Fund Composition

Holdings

ARKK - Holdings

ARKK HoldingsWeight
Tesla Inc9.56%
Roku Inc Class A6.48%
Teladoc Health Inc5.76%
Square Inc A4.37%
Zoom Video Communications Inc4.36%
Shopify Inc A4.27%
Spotify Technology SA3.68%
Twilio Inc A3.66%
Coinbase Global Inc Ordinary Shares – Class A3.65%
Unity Software Inc Ordinary Shares3.41%

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%.

BIV - Holdings

BIV Bond SectorsWeight
AAA54.51%
BBB25.24%
A16.97%
AA3.1%
Others0.15%
Below B0.03%
B0.0%
BB0.0%
US Government0.0%

BIV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 54.51%, 25.24%, 16.97%, 3.1%, and 0.15%. The fund is less weighted towards Below B (0.03%), B (0.0%), and BB (0.0%) rated bonds.

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Risk Analysis

ARKKBIV
Mean Return00.35
R-squared095.12
Std. Deviation04.09
Alpha0-0.07
Beta01.33
Sharpe Ratio00.89
Treynor Ratio02.72

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

The Vanguard Intermediate-Term Bond Index Fund ETF Shares (BIV) has a Standard Deviation of 4.09 with a Mean Return of 0.35 and a Treynor Ratio of 2.72. Its Sharpe Ratio is 0.89 while BIV’s R-squared is 95.12. Furthermore, the fund has a Beta of 1.33 and a Alpha of -0.07.

ARKK’s Mean Return is 0.35 points lower than that of BIV and its R-squared is 95.12 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than BIV. The Alpha and Beta of ARKK are 0.07 points higher and 1.33 points lower than BIV’s Alpha and Beta.

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Performance

Annual Returns

ARKK vs. BIV - Annual Returns

YearARKKBIV
2020152.52%9.71%
201935.73%10.19%
20183.58%-0.09%
201787.38%3.8%
2016-1.96%2.86%
20153.76%1.23%
20140.0%7.0%
20130.0%-3.44%
20120.0%7.02%
20110.0%10.62%
20100.0%9.55%

ARKK had its best year in 2020 with an annual return of 152.52%. ARKK’s worst year over the past decade yielded -1.96% and occurred in 2016. In most years the ARK Innovation ETF provided moderate returns such as in 2011, 2010, and 2018 where annual returns amounted to 0.0%, 0.0%, and 3.58% respectively.

The year 2011 was the strongest year for BIV, returning 10.62% on an annual basis. The poorest year for BIV in the last ten years was 2013, with a yield of -3.44%. Most years the Vanguard Intermediate-Term Bond Index Fund ETF Shares has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 3.8%, 7.0%, and 7.02% respectively.

Portfolio Growth

ARKK vs. BIV - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ARKK$10,000$65,21855.45%
BIV$10,000$12,8955.31%

A $10,000 investment in ARKK would have resulted in a final balance of $65,218. This is a profit of $55,218 over 5 years and amounts to a compound annual growth rate (CAGR) of 55.45%.

With a $10,000 investment in BIV, the end total would have been $12,895. This equates to a $2,895 profit over 5 years and a compound annual growth rate (CAGR) of 5.31%.

ARKK’s CAGR is 50.14 percentage points higher than that of BIV and as a result, would have yielded $52,323 more on a $10,000 investment. Thus, ARKK outperformed BIV by 50.14% annually.


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