ARKK vs. VLUE: What’s The Difference?

The ARK Innovation ETF (ARKK) and the iShares MSCI USA Value Factor ETF (VLUE) are both among the Top 100 ETFs. ARKK is a ARK ETF Trust Mid-Cap Growth fund and VLUE is a iShares Large Value fund. So, what’s the difference between ARKK and VLUE? And which fund is better?

The expense ratio of ARKK is 0.60 percentage points higher than VLUE’s (0.75% vs. 0.15%). ARKK also has a higher exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than VLUE over the past 5 years.

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

Summary

ARKK VLUE
Name ARK Innovation ETF iShares MSCI USA Value Factor ETF
Category Mid-Cap Growth Large Value
Issuer ARK ETF Trust iShares
AUM 25.52B 15.95B
Avg. Return 55.45% 8.91%
Div. Yield 0.0% 1.89%
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 MSCI USA Value Factor ETF (VLUE) is a Large Value fund that is issued by iShares. It currently has 15.95B total assets under management and has yielded an average annual return of 8.91% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.15%.

ARKK’s dividend yield is 1.89% lower than that of VLUE (0.0% vs. 1.89%). Also, ARKK yielded on average 46.54% more per year over the past decade (55.45% vs. 8.91%). The expense ratio of ARKK is 0.60 percentage points higher than VLUE’s (0.75% vs. 0.15%).

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Fund Composition

Industry Exposure

ARKK vs. VLUE - Industry Exposure

ARKK VLUE
Technology 30.5% 26.89%
Industrials 2.11% 9.14%
Energy 0.0% 2.42%
Communication Services 25.01% 10.39%
Utilities 0.0% 2.68%
Healthcare 29.47% 14.31%
Consumer Defensive 0.93% 7.22%
Real Estate 0.51% 3.19%
Financial Services 0.04% 10.96%
Consumer Cyclical 11.42% 10.66%
Basic Materials 0.0% 2.14%

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 iShares MSCI USA Value Factor ETF (VLUE) has the most exposure to the Technology sector at 26.89%. This is followed by Healthcare and Financial Services at 14.31% and 10.96% respectively. Energy (2.42%), Utilities (2.68%), and Real Estate (3.19%) only make up 8.29% of the fund’s total assets.

VLUE’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Financial Services stocks at 7.22%, 9.14%, 10.39%, 10.66%, and 10.96%.

ARKK is 3.61% more exposed to the Technology sector than VLUE (30.5% vs 26.89%). ARKK’s exposure to Healthcare and Communication Services stocks is 15.16% higher and 14.62% higher respectively (29.47% vs. 14.31% and 25.01% vs. 10.39%). In total, Utilities, Energy, and Financial Services also make up 16.02% less of the fund’s holdings compared to VLUE (0.04% vs. 16.06%).

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%.

VLUE - Holdings

VLUE Holdings Weight
AT&T Inc 7.13%
Intel Corp 6.14%
General Motors Co 3.19%
Micron Technology Inc 3.14%
Cisco Systems Inc 3.05%
International Business Machines Corp 2.76%
Target Corp 2.38%
Citigroup Inc 2.32%
Ford Motor Co 2.23%
Pfizer Inc 2.17%

VLUE’s Top Holdings are AT&T Inc, Intel Corp, General Motors Co, Micron Technology Inc, and Cisco Systems Inc at 7.13%, 6.14%, 3.19%, 3.14%, and 3.05%.

International Business Machines Corp (2.76%), Target Corp (2.38%), and Citigroup Inc (2.32%) have a slightly smaller but still significant weight. Ford Motor Co and Pfizer Inc are also represented in the VLUE’s holdings at 2.23% and 2.17%.

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Risk Analysis

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

The iShares MSCI USA Value Factor ETF (VLUE) has a R-squared of 0 with a Alpha of 0 and a Beta of 0. Its Standard Deviation is 0 while VLUE’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.

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

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Performance

Annual Returns

ARKK vs. VLUE - Annual Returns

Year ARKK VLUE
2020 152.52% -0.32%
2019 35.73% 27.47%
2018 3.58% -11.18%
2017 87.38% 21.97%
2016 -1.96% 15.68%
2015 3.76% -3.54%
2014 0.0% 12.29%
2013 0.0% 0.0%
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 2019 was the strongest year for VLUE, returning 27.47% on an annual basis. The poorest year for VLUE in the last ten years was 2018, with a yield of -11.18%. Most years the iShares MSCI USA Value Factor ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

ARKK vs. VLUE - Portfolio Growth

Fund Initial Balance Final Balance CAGR
ARKK $10,000 $65,218 55.45%
VLUE $10,000 $15,923 8.91%

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 VLUE, the end total would have been $15,923. This equates to a $5,923 profit over 5 years and a compound annual growth rate (CAGR) of 8.91%.

ARKK’s CAGR is 46.54 percentage points higher than that of VLUE and as a result, would have yielded $49,295 more on a $10,000 investment. Thus, ARKK outperformed VLUE by 46.54% annually.


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