ARKK vs. GOVT: What’s The Difference?

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

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

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

Summary

ARKK GOVT
Name ARK Innovation ETF iShares U.S. Treasury Bond ETF
Category Mid-Cap Growth Intermediate Government
Issuer ARK ETF Trust iShares
AUM 25.52B 17.07B
Avg. Return 55.45% 2.67%
Div. Yield 0.0% 1.0%
Expense Ratio 0.75% 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 iShares U.S. Treasury Bond ETF (GOVT) is a Intermediate Government fund that is issued by iShares. It currently has 17.07B total assets under management and has yielded an average annual return of 2.67% over the past 10 years. The fund has a dividend yield of 1.0% with an expense ratio of 0.05%.

ARKK’s dividend yield is 1.00% lower than that of GOVT (0.0% vs. 1.0%). Also, ARKK yielded on average 52.78% more per year over the past decade (55.45% vs. 2.67%). The expense ratio of ARKK is 0.70 percentage points higher than GOVT’s (0.75% vs. 0.05%).

Fund Composition

Holdings

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%.

GOVT - Holdings

GOVT Bond Sectors Weight
AAA 100.0%
Others 0.0%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

GOVT’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 100.0%, 0.0%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

Risk Analysis

ARKK GOVT
Mean Return 0 0
R-squared 0 0
Std. Deviation 0 0
Alpha 0 0
Beta 0 0
Sharpe Ratio 0 0
Treynor Ratio 0 0

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

The iShares U.S. Treasury Bond ETF (GOVT) has a Alpha of 0 with a Beta of 0 and a Standard Deviation of 0. Its Treynor Ratio is 0 while GOVT’s Sharpe Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a R-squared of 0.

ARKK’s Mean Return is 0.00 points lower than that of GOVT and its R-squared is 0.00 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than GOVT. The Alpha and Beta of ARKK are 0.00 points lower and 0.00 points lower than GOVT’s Alpha and Beta.

Performance

Annual Returns

ARKK vs. GOVT - Annual Returns

Year ARKK GOVT
2020 152.52% 7.92%
2019 35.73% 6.71%
2018 3.58% 0.74%
2017 87.38% 2.19%
2016 -1.96% 0.92%
2015 3.76% 0.76%
2014 0.0% 4.99%
2013 0.0% -2.84%
2012 0.0% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

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 2020 was the strongest year for GOVT, returning 7.92% on an annual basis. The poorest year for GOVT in the last ten years was 2013, with a yield of -2.84%. Most years the iShares U.S. Treasury Bond ETF has given investors modest returns, such as in 2018, 2015, and 2016, when gains were 0.74%, 0.76%, and 0.92% respectively.

Portfolio Growth

ARKK vs. GOVT - Portfolio Growth

Fund Initial Balance Final Balance CAGR
ARKK $10,000 $65,218 55.45%
GOVT $10,000 $11,964 2.67%

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 GOVT, the end total would have been $11,964. This equates to a $1,964 profit over 5 years and a compound annual growth rate (CAGR) of 2.67%.

ARKK’s CAGR is 52.78 percentage points higher than that of GOVT and as a result, would have yielded $53,254 more on a $10,000 investment. Thus, ARKK outperformed GOVT by 52.78% annually.


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