BSV vs. ARKK: What’s The Difference?

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

The expense ratio of BSV is 0.70 percentage points lower than ARKK’s (0.05% vs. 0.75%). BSV is mostly comprised of AAA bonds while ARKK has a high exposure to the technology sector. Overall, BSV has provided lower returns than ARKK over the past ten years.

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

Summary

BSV ARKK
Name Vanguard Short-Term Bond Index Fund ETF Shares ARK Innovation ETF
Category Short-Term Bond Mid-Cap Growth
Issuer Vanguard ARK ETF Trust
AUM 67.71B 25.52B
Avg. Return 2.27% 55.45%
Div. Yield 1.48% 0.0%
Expense Ratio 0.05% 0.75%

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) is a Short-Term Bond fund that is issued by Vanguard. It currently has 67.71B total assets under management and has yielded an average annual return of 2.27% over the past 10 years. The fund has a dividend yield of 1.48% with an expense ratio of 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%.

BSV’s dividend yield is 1.48% higher than that of ARKK (1.48% vs. 0.0%). Also, BSV yielded on average 53.18% less per year over the past decade (2.27% vs. 55.45%). The expense ratio of BSV is 0.70 percentage points lower than ARKK’s (0.05% vs. 0.75%).

Fund Composition

Holdings

BSV - Holdings

BSV Bond Sectors Weight
AAA 71.65%
BBB 13.08%
A 11.95%
AA 3.28%
Others 0.03%
Below B 0.01%
B 0.0%
BB 0.0%
US Government 0.0%

BSV’s Top Bond Sectors are ratings of AAA, BBB, A, AA, and Others at 71.65%, 13.08%, 11.95%, 3.28%, and 0.03%. The fund is less weighted towards Below B (0.01%), B (0.0%), and BB (0.0%) rated bonds.

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%.

Risk Analysis

BSV ARKK
Mean Return 0.16 0
R-squared 78.38 0
Std. Deviation 1.33 0
Alpha 0.21 0
Beta 0.38 0
Sharpe Ratio 0.98 0
Treynor Ratio 3.33 0

The Vanguard Short-Term Bond Index Fund ETF Shares (BSV) has a R-squared of 78.38 with a Standard Deviation of 1.33 and a Mean Return of 0.16. Its Treynor Ratio is 3.33 while BSV’s Sharpe Ratio is 0.98. Furthermore, the fund has a Alpha of 0.21 and a Beta of 0.38.

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

BSV’s Mean Return is 0.16 points higher than that of ARKK and its R-squared is 78.38 points higher. With a Standard Deviation of 1.33, BSV is slightly more volatile than ARKK. The Alpha and Beta of BSV are 0.21 points higher and 0.38 points higher than ARKK’s Alpha and Beta.

Performance

Annual Returns

BSV vs. ARKK - Annual Returns

Year BSV ARKK
2020 4.67% 152.52%
2019 4.92% 35.73%
2018 1.34% 3.58%
2017 1.2% 87.38%
2016 1.42% -1.96%
2015 0.92% 3.76%
2014 1.32% 0.0%
2013 0.17% 0.0%
2012 1.98% 0.0%
2011 3.04% 0.0%
2010 4.0% 0.0%

BSV had its best year in 2019 with an annual return of 4.92%. BSV’s worst year over the past decade yielded 0.17% and occurred in 2013. In most years the Vanguard Short-Term Bond Index Fund ETF Shares provided moderate returns such as in 2018, 2016, and 2012 where annual returns amounted to 1.34%, 1.42%, and 1.98% respectively.

The year 2020 was the strongest year for ARKK, returning 152.52% on an annual basis. The poorest year for ARKK in the last ten years was 2016, with a yield of -1.96%. Most years the ARK Innovation ETF has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 3.58% respectively.

Portfolio Growth

BSV vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
BSV $10,000 $11,422 2.27%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in BSV would have resulted in a final balance of $11,422. This is a profit of $1,422 over 5 years and amounts to a compound annual growth rate (CAGR) of 2.27%.

With a $10,000 investment in ARKK, the end total would have been $65,218. This equates to a $55,218 profit over 5 years and a compound annual growth rate (CAGR) of 55.45%.

BSV’s CAGR is 53.18 percentage points lower than that of ARKK and as a result, would have yielded $53,796 less on a $10,000 investment. Thus, BSV performed worse than ARKK by 53.18% annually.


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