ARKK vs. SCHG: What’s The Difference?

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

The expense ratio of ARKK is 0.71 percentage points higher than SCHG’s (0.75% vs. 0.04%). ARKK also has a lower exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than SCHG over the past 5 years.

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

Summary

ARKK SCHG
Name ARK Innovation ETF Schwab U.S. Large-Cap Growth ETF
Category Mid-Cap Growth Large Growth
Issuer ARK ETF Trust Schwab ETFs
AUM 25.52B 15.16B
Avg. Return 55.45% 17.81%
Div. Yield 0.0% 0.43%
Expense Ratio 0.75% 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%.

The Schwab U.S. Large-Cap Growth ETF (SCHG) is a Large Growth fund that is issued by Schwab ETFs. It currently has 15.16B total assets under management and has yielded an average annual return of 17.81% over the past 10 years. The fund has a dividend yield of 0.43% with an expense ratio of 0.04%.

ARKK’s dividend yield is 0.43% lower than that of SCHG (0.0% vs. 0.43%). Also, ARKK yielded on average 37.64% more per year over the past decade (55.45% vs. 17.81%). The expense ratio of ARKK is 0.71 percentage points higher than SCHG’s (0.75% vs. 0.04%).

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Fund Composition

Industry Exposure

ARKK vs. SCHG - Industry Exposure

ARKK SCHG
Technology 30.5% 39.21%
Industrials 2.11% 3.01%
Energy 0.0% 0.2%
Communication Services 25.01% 17.07%
Utilities 0.0% 0.0%
Healthcare 29.47% 12.05%
Consumer Defensive 0.93% 2.15%
Real Estate 0.51% 1.64%
Financial Services 0.04% 7.98%
Consumer Cyclical 11.42% 15.01%
Basic Materials 0.0% 1.68%

The ARK Innovation ETF (ARKK) has the most exposure to the Technology sector at 30.5%. This is followed by Healthcare and Communication Services at 29.47% and 25.01% respectively. Utilities (0.0%), Energy (0.0%), and Financial Services (0.04%) only make up 0.04% of the fund’s total assets.

ARKK’s mid-section with moderate exposure is comprised of Real Estate, Consumer Defensive, Industrials, Consumer Cyclical, and Communication Services stocks at 0.51%, 0.93%, 2.11%, 11.42%, and 25.01%.

The Schwab U.S. Large-Cap Growth ETF (SCHG) has the most exposure to the Technology sector at 39.21%. This is followed by Communication Services and Consumer Cyclical at 17.07% and 15.01% respectively. Energy (0.2%), Real Estate (1.64%), and Basic Materials (1.68%) only make up 3.52% of the fund’s total assets.

SCHG’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 2.15%, 3.01%, 7.98%, 12.05%, and 15.01%.

ARKK is 8.71% less exposed to the Technology sector than SCHG (30.5% vs 39.21%). ARKK’s exposure to Healthcare and Communication Services stocks is 17.42% higher and 7.94% higher respectively (29.47% vs. 12.05% and 25.01% vs. 17.07%). In total, Utilities, Energy, and Financial Services also make up 8.14% less of the fund’s holdings compared to SCHG (0.04% vs. 8.18%).

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%.

SCHG - Holdings

SCHG Holdings Weight
Apple Inc 11.49%
Microsoft Corp 10.91%
Amazon.com Inc 7.89%
Facebook Inc A 4.45%
Alphabet Inc A 3.93%
Alphabet Inc Class C 3.82%
Tesla Inc 2.8%
NVIDIA Corp 2.67%
Visa Inc Class A 2.12%
UnitedHealth Group Inc 2.02%

SCHG’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 11.49%, 10.91%, 7.89%, 4.45%, and 3.93%.

Alphabet Inc Class C (3.82%), Tesla Inc (2.8%), and NVIDIA Corp (2.67%) have a slightly smaller but still significant weight. Visa Inc Class A and UnitedHealth Group Inc are also represented in the SCHG’s holdings at 2.12% and 2.02%.

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Risk Analysis

ARKK SCHG
Mean Return 0 1.46
R-squared 0 92.92
Std. Deviation 0 14.78
Alpha 0 1.97
Beta 0 1.05
Sharpe Ratio 0 1.14
Treynor Ratio 0 16.3

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

The Schwab U.S. Large-Cap Growth ETF (SCHG) has a Mean Return of 1.46 with a Alpha of 1.97 and a Treynor Ratio of 16.3. Its Standard Deviation is 14.78 while SCHG’s Beta is 1.05. Furthermore, the fund has a R-squared of 92.92 and a Sharpe Ratio of 1.14.

ARKK’s Mean Return is 1.46 points lower than that of SCHG and its R-squared is 92.92 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than SCHG. The Alpha and Beta of ARKK are 1.97 points lower and 1.05 points lower than SCHG’s Alpha and Beta.

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Performance

Annual Returns

ARKK vs. SCHG - Annual Returns

Year ARKK SCHG
2020 152.52% 39.13%
2019 35.73% 36.21%
2018 3.58% -1.35%
2017 87.38% 28.04%
2016 -1.96% 6.76%
2015 3.76% 3.26%
2014 0.0% 15.74%
2013 0.0% 33.96%
2012 0.0% 17.02%
2011 0.0% -0.67%
2010 0.0% 16.83%

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 SCHG, returning 39.13% on an annual basis. The poorest year for SCHG in the last ten years was 2018, with a yield of -1.35%. Most years the Schwab U.S. Large-Cap Growth ETF has given investors modest returns, such as in 2014, 2010, and 2012, when gains were 15.74%, 16.83%, and 17.02% respectively.

Portfolio Growth

ARKK vs. SCHG - Portfolio Growth

Fund Initial Balance Final Balance CAGR
ARKK $10,000 $65,218 55.45%
SCHG $10,000 $25,555 17.81%

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 SCHG, the end total would have been $25,555. This equates to a $15,555 profit over 5 years and a compound annual growth rate (CAGR) of 17.81%.

ARKK’s CAGR is 37.64 percentage points higher than that of SCHG and as a result, would have yielded $39,663 more on a $10,000 investment. Thus, ARKK outperformed SCHG by 37.64% annually.


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