The ARK Innovation ETF (ARKK) and the iShares 20+ Year Treasury Bond ETF (TLT) are both among the Top 100 ETFs. ARKK is a ARK ETF Trust Mid-Cap Growth fund and TLT is a iShares Long Government fund. So, what’s the difference between ARKK and TLT? And which fund is better?

The expense ratio of ARKK is 0.60 percentage points higher than TLT’s (0.75% vs. 0.15%). ARKK also has a high exposure to the technology sector while TLT is mostly comprised of AAA bonds. Overall, ARKK has provided higher returns than TLT over the past 5 years.

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

Summary

ARKKTLT
NameARK Innovation ETFiShares 20+ Year Treasury Bond ETF
CategoryMid-Cap GrowthLong Government
IssuerARK ETF TrustiShares
AUM25.52B15.15B
Avg. Return55.45%9.00%
Div. Yield0.0%1.5%
Expense Ratio0.75%0.15%

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 20+ Year Treasury Bond ETF (TLT) is a Long Government fund that is issued by iShares. It currently has 15.15B total assets under management and has yielded an average annual return of 9.00% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.

ARKK’s dividend yield is 1.50% lower than that of TLT (0.0% vs. 1.5%). Also, ARKK yielded on average 46.45% more per year over the past decade (55.45% vs. 9.00%). The expense ratio of ARKK is 0.60 percentage points higher than TLT’s (0.75% vs. 0.15%).

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%.

TLT - Holdings

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

TLT’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

ARKKTLT
Mean Return00.63
R-squared068.76
Std. Deviation012.76
Alpha0-2.83
Beta03.54
Sharpe Ratio00.55
Treynor Ratio01.82

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

The iShares 20+ Year Treasury Bond ETF (TLT) has a Alpha of -2.83 with a R-squared of 68.76 and a Standard Deviation of 12.76. Its Sharpe Ratio is 0.55 while TLT’s Beta is 3.54. Furthermore, the fund has a Treynor Ratio of 1.82 and a Mean Return of 0.63.

ARKK’s Mean Return is 0.63 points lower than that of TLT and its R-squared is 68.76 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than TLT. The Alpha and Beta of ARKK are 2.83 points higher and 3.54 points lower than TLT’s Alpha and Beta.

Performance

Annual Returns

ARKK vs. TLT - Annual Returns

YearARKKTLT
2020152.52%17.92%
201935.73%14.93%
20183.58%-2.07%
201787.38%8.92%
2016-1.96%1.36%
20153.76%-1.65%
20140.0%27.35%
20130.0%-13.91%
20120.0%3.25%
20110.0%33.6%
20100.0%9.25%

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 TLT, returning 33.6% on an annual basis. The poorest year for TLT in the last ten years was 2013, with a yield of -13.91%. Most years the iShares 20+ Year Treasury Bond ETF has given investors modest returns, such as in 2012, 2017, and 2010, when gains were 3.25%, 8.92%, and 9.25% respectively.

Portfolio Growth

ARKK vs. TLT - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ARKK$10,000$65,21855.45%
TLT$10,000$14,6529.00%

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 TLT, the end total would have been $14,652. This equates to a $4,652 profit over 5 years and a compound annual growth rate (CAGR) of 9.00%.

ARKK’s CAGR is 46.45 percentage points higher than that of TLT and as a result, would have yielded $50,566 more on a $10,000 investment. Thus, ARKK outperformed TLT by 46.45% annually.

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