The ARK Innovation ETF (ARKK) and the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) are both among the Top 100 ETFs. ARKK is a ARK ETF Trust Mid-Cap Growth fund and VTIP is a Vanguard Inflation-Protected Bond fund. So, what’s the difference between ARKK and VTIP? And which fund is better?
The expense ratio of ARKK is 0.70 percentage points higher than VTIP’s (0.75% vs. 0.05%). ARKK also has a high exposure to the technology sector while VTIP is mostly comprised of AAA bonds. Overall, ARKK has provided higher returns than VTIP over the past 5 years.
In this article, we’ll compare ARKK vs. VTIP. We’ll look at annual returns and industry exposure, as well as at their holdings and risk metrics. Moreover, I’ll also discuss ARKK’s and VTIP’s fund composition, portfolio growth, and performance and examine how these affect their overall returns.
Summary
| ARKK | VTIP | |
| Name | ARK Innovation ETF | Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares |
| Category | Mid-Cap Growth | Inflation-Protected Bond |
| Issuer | ARK ETF Trust | Vanguard |
| AUM | 25.52B | 50.67B |
| Avg. Return | 55.45% | 1.79% |
| Div. Yield | 0.0% | 1.35% |
| Expense Ratio | 0.75% | 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 Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) is a Inflation-Protected Bond fund that is issued by Vanguard. It currently has 50.67B total assets under management and has yielded an average annual return of 1.79% over the past 10 years. The fund has a dividend yield of 1.35% with an expense ratio of 0.05%.
ARKK’s dividend yield is 1.35% lower than that of VTIP (0.0% vs. 1.35%). Also, ARKK yielded on average 53.66% more per year over the past decade (55.45% vs. 1.79%). The expense ratio of ARKK is 0.70 percentage points higher than VTIP’s (0.75% vs. 0.05%).
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%.
| VTIP Bond Sectors | Weight |
| AAA | 99.87% |
| Others | 0.13% |
| Below B | 0.0% |
| B | 0.0% |
| BB | 0.0% |
| BBB | 0.0% |
| A | 0.0% |
| AA | 0.0% |
| US Government | 0.0% |
VTIP’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.87%, 0.13%, 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 | VTIP | |
| 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 Treynor Ratio of 0 with a Sharpe Ratio of 0 and a Mean Return of 0. Its R-squared is 0 while ARKK’s Standard Deviation is 0. Furthermore, the fund has a Beta of 0 and a Alpha of 0.
The Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares (VTIP) has a Mean Return of 0 with a Beta of 0 and a Alpha of 0. Its R-squared is 0 while VTIP’s Treynor Ratio is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.
ARKK’s Mean Return is 0.00 points lower than that of VTIP and its R-squared is 0.00 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than VTIP. The Alpha and Beta of ARKK are 0.00 points lower and 0.00 points lower than VTIP’s Alpha and Beta.
Performance
Annual Returns
| Year | ARKK | VTIP |
| 2020 | 152.52% | 4.97% |
| 2019 | 35.73% | 4.83% |
| 2018 | 3.58% | 0.54% |
| 2017 | 87.38% | 0.82% |
| 2016 | -1.96% | 2.71% |
| 2015 | 3.76% | -0.15% |
| 2014 | 0.0% | -1.17% |
| 2013 | 0.0% | -1.55% |
| 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 2020 was the strongest year for VTIP, returning 4.97% on an annual basis. The poorest year for VTIP in the last ten years was 2013, with a yield of -1.55%. Most years the Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 0.54% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ARKK | $10,000 | $65,218 | 55.45% |
| VTIP | $10,000 | $11,456 | 1.79% |
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 VTIP, the end total would have been $11,456. This equates to a $1,456 profit over 5 years and a compound annual growth rate (CAGR) of 1.79%.
ARKK’s CAGR is 53.66 percentage points higher than that of VTIP and as a result, would have yielded $53,762 more on a $10,000 investment. Thus, ARKK outperformed VTIP by 53.66% annually.
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