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ARKK vs. SCHP: What’s The Difference?

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

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

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

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Summary

ARKKSCHP
NameARK Innovation ETFSchwab U.S. TIPS ETF
CategoryMid-Cap GrowthInflation-Protected Bond
IssuerARK ETF TrustSchwab ETFs
AUM25.52B18.41B
Avg. Return55.45%3.92%
Div. Yield0.0%1.97%
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 Schwab U.S. TIPS ETF (SCHP) is a Inflation-Protected Bond fund that is issued by Schwab ETFs. It currently has 18.41B total assets under management and has yielded an average annual return of 3.92% over the past 10 years. The fund has a dividend yield of 1.97% with an expense ratio of 0.05%.

ARKK’s dividend yield is 1.97% lower than that of SCHP (0.0% vs. 1.97%). Also, ARKK yielded on average 51.54% more per year over the past decade (55.45% vs. 3.92%). The expense ratio of ARKK is 0.70 percentage points higher than SCHP’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%.

SCHP - Holdings

SCHP Bond SectorsWeight
AAA100.0%
Others0.0%
Below B0.0%
B0.0%
BB0.0%
BBB0.0%
A0.0%
AA0.0%
US Government0.0%

SCHP’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.

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Risk Analysis

ARKKSCHP
Mean Return00.28
R-squared066.16
Std. Deviation04.32
Alpha0-0.5
Beta01.17
Sharpe Ratio00.64
Treynor Ratio02.31

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

The Schwab U.S. TIPS ETF (SCHP) has a Treynor Ratio of 2.31 with a Standard Deviation of 4.32 and a Sharpe Ratio of 0.64. Its Mean Return is 0.28 while SCHP’s Beta is 1.17. Furthermore, the fund has a Alpha of -0.5 and a R-squared of 66.16.

ARKK’s Mean Return is 0.28 points lower than that of SCHP and its R-squared is 66.16 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than SCHP. The Alpha and Beta of ARKK are 0.50 points higher and 1.17 points lower than SCHP’s Alpha and Beta.

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Performance

Annual Returns

ARKK vs. SCHP - Annual Returns

YearARKKSCHP
2020152.52%10.94%
201935.73%8.36%
20183.58%-1.31%
201787.38%2.95%
2016-1.96%4.6%
20153.76%-1.5%
20140.0%3.56%
20130.0%-8.66%
20120.0%6.83%
20110.0%13.38%
20100.0%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 2011 was the strongest year for SCHP, returning 13.38% on an annual basis. The poorest year for SCHP in the last ten years was 2013, with a yield of -8.66%. Most years the Schwab U.S. TIPS ETF has given investors modest returns, such as in 2017, 2014, and 2016, when gains were 2.95%, 3.56%, and 4.6% respectively.

Portfolio Growth

ARKK vs. SCHP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ARKK$10,000$65,21855.45%
SCHP$10,000$12,7753.92%

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 SCHP, the end total would have been $12,775. This equates to a $2,775 profit over 5 years and a compound annual growth rate (CAGR) of 3.92%.

ARKK’s CAGR is 51.54 percentage points higher than that of SCHP and as a result, would have yielded $52,443 more on a $10,000 investment. Thus, ARKK outperformed SCHP by 51.54% annually.


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