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ARKK vs. VXF: What’s The Difference?

The ARK Innovation ETF (ARKK) and the Vanguard Extended Market Index Fund ETF Shares (VXF) are both among the Top 100 ETFs. ARKK is a ARK ETF Trust Mid-Cap Growth fund and VXF is a Vanguard Mid-Cap Growth fund. So, what’s the difference between ARKK and VXF? And which fund is better?

The expense ratio of ARKK is 0.69 percentage points higher than VXF’s (0.75% vs. 0.06%). ARKK also has a higher exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than VXF over the past 5 years.

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

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Summary

ARKKVXF
NameARK Innovation ETFVanguard Extended Market Index Fund ETF Shares
CategoryMid-Cap GrowthMid-Cap Growth
IssuerARK ETF TrustVanguard
AUM25.52B114.53B
Avg. Return55.45%15.47%
Div. Yield0.0%1.19%
Expense Ratio0.75%0.06%

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 Extended Market Index Fund ETF Shares (VXF) is a Mid-Cap Growth fund that is issued by Vanguard. It currently has 114.53B total assets under management and has yielded an average annual return of 15.47% over the past 10 years. The fund has a dividend yield of 1.19% with an expense ratio of 0.06%.

ARKK’s dividend yield is 1.19% lower than that of VXF (0.0% vs. 1.19%). Also, ARKK yielded on average 39.98% more per year over the past decade (55.45% vs. 15.47%). The expense ratio of ARKK is 0.69 percentage points higher than VXF’s (0.75% vs. 0.06%).

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Fund Composition

Industry Exposure

ARKK vs. VXF - Industry Exposure

ARKKVXF
Technology30.5%23.61%
Industrials2.11%11.31%
Energy0.0%2.46%
Communication Services25.01%7.29%
Utilities0.0%1.65%
Healthcare29.47%15.25%
Consumer Defensive0.93%3.09%
Real Estate0.51%8.16%
Financial Services0.04%12.56%
Consumer Cyclical11.42%11.35%
Basic Materials0.0%3.26%

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 Vanguard Extended Market Index Fund ETF Shares (VXF) has the most exposure to the Technology sector at 23.61%. This is followed by Healthcare and Financial Services at 15.25% and 12.56% respectively. Energy (2.46%), Consumer Defensive (3.09%), and Basic Materials (3.26%) only make up 8.81% of the fund’s total assets.

VXF’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Industrials, Consumer Cyclical, and Financial Services stocks at 7.29%, 8.16%, 11.31%, 11.35%, and 12.56%.

ARKK is 6.89% more exposed to the Technology sector than VXF (30.5% vs 23.61%). ARKK’s exposure to Healthcare and Communication Services stocks is 14.22% higher and 17.72% higher respectively (29.47% vs. 15.25% and 25.01% vs. 7.29%). In total, Utilities, Energy, and Financial Services also make up 16.63% less of the fund’s holdings compared to VXF (0.04% vs. 16.67%).

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%.

VXF - Holdings

VXF HoldingsWeight
Square Inc A1.2%
Zoom Video Communications Inc1.04%
Uber Technologies Inc0.93%
Moderna Inc0.9%
Blackstone Group Inc0.83%
Snap Inc Class A0.8%
Twilio Inc A0.73%
DocuSign Inc0.68%
CrowdStrike Holdings Inc Class A0.63%
Marvell Technology Inc0.6%

VXF’s Top Holdings are Square Inc A, Zoom Video Communications Inc, Uber Technologies Inc, Moderna Inc, and Blackstone Group Inc at 1.2%, 1.04%, 0.93%, 0.9%, and 0.83%.

Snap Inc Class A (0.8%), Twilio Inc A (0.73%), and DocuSign Inc (0.68%) have a slightly smaller but still significant weight. CrowdStrike Holdings Inc Class A and Marvell Technology Inc are also represented in the VXF’s holdings at 0.63% and 0.6%.

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Risk Analysis

ARKKVXF
Mean Return01.24
R-squared085.73
Std. Deviation018.04
Alpha0-3.26
Beta01.23
Sharpe Ratio00.79
Treynor Ratio010.92

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

The Vanguard Extended Market Index Fund ETF Shares (VXF) has a Sharpe Ratio of 0.79 with a Standard Deviation of 18.04 and a Treynor Ratio of 10.92. Its R-squared is 85.73 while VXF’s Beta is 1.23. Furthermore, the fund has a Mean Return of 1.24 and a Alpha of -3.26.

ARKK’s Mean Return is 1.24 points lower than that of VXF and its R-squared is 85.73 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than VXF. The Alpha and Beta of ARKK are 3.26 points higher and 1.23 points lower than VXF’s Alpha and Beta.

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Performance

Annual Returns

ARKK vs. VXF - Annual Returns

YearARKKVXF
2020152.52%32.19%
201935.73%28.04%
20183.58%-9.37%
201787.38%18.1%
2016-1.96%16.16%
20153.76%-3.26%
20140.0%7.55%
20130.0%38.37%
20120.0%18.48%
20110.0%-3.61%
20100.0%27.55%

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 2013 was the strongest year for VXF, returning 38.37% on an annual basis. The poorest year for VXF in the last ten years was 2018, with a yield of -9.37%. Most years the Vanguard Extended Market Index Fund ETF Shares has given investors modest returns, such as in 2016, 2017, and 2012, when gains were 16.16%, 18.1%, and 18.48% respectively.

Portfolio Growth

ARKK vs. VXF - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ARKK$10,000$65,21855.45%
VXF$10,000$21,04315.47%

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 VXF, the end total would have been $21,043. This equates to a $11,043 profit over 5 years and a compound annual growth rate (CAGR) of 15.47%.

ARKK’s CAGR is 39.98 percentage points higher than that of VXF and as a result, would have yielded $44,175 more on a $10,000 investment. Thus, ARKK outperformed VXF by 39.98% annually.


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