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.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
Summary
| ARKK | TLT | |
| Name | ARK Innovation ETF | iShares 20+ Year Treasury Bond ETF |
| Category | Mid-Cap Growth | Long Government |
| Issuer | ARK ETF Trust | iShares |
| AUM | 25.52B | 15.15B |
| Avg. Return | 55.45% | 9.00% |
| Div. Yield | 0.0% | 1.5% |
| Expense Ratio | 0.75% | 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%).
FYI: The best way I've found to invest is through M1 Finance. It's free and you even get an instant line of credit and 100$! Have a look here (link to M1 Finance).
Fund Composition
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%.
| TLT 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% |
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
| ARKK | TLT | |
| Mean Return | 0 | 0.63 |
| R-squared | 0 | 68.76 |
| Std. Deviation | 0 | 12.76 |
| Alpha | 0 | -2.83 |
| Beta | 0 | 3.54 |
| Sharpe Ratio | 0 | 0.55 |
| Treynor Ratio | 0 | 1.82 |
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.
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
Performance
Annual Returns
| Year | ARKK | TLT |
| 2020 | 152.52% | 17.92% |
| 2019 | 35.73% | 14.93% |
| 2018 | 3.58% | -2.07% |
| 2017 | 87.38% | 8.92% |
| 2016 | -1.96% | 1.36% |
| 2015 | 3.76% | -1.65% |
| 2014 | 0.0% | 27.35% |
| 2013 | 0.0% | -13.91% |
| 2012 | 0.0% | 3.25% |
| 2011 | 0.0% | 33.6% |
| 2010 | 0.0% | 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
| Fund | Initial Balance | Final Balance | CAGR |
| ARKK | $10,000 | $65,218 | 55.45% |
| TLT | $10,000 | $14,652 | 9.00% |
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.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
