SCHD vs. ARKK: What’s The Difference?

The Schwab U.S. Dividend Equity ETF (SCHD) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. SCHD is a Schwab ETFs Large Value fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between SCHD and ARKK? And which fund is better?

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

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

Summary

SCHD ARKK
Name Schwab U.S. Dividend Equity ETF ARK Innovation ETF
Category Large Value Mid-Cap Growth
Issuer Schwab ETFs ARK ETF Trust
AUM 26B 25.52B
Avg. Return 14.80% 55.45%
Div. Yield 2.89% 0.0%
Expense Ratio 0.06% 0.75%

The Schwab U.S. Dividend Equity ETF (SCHD) is a Large Value fund that is issued by Schwab ETFs. It currently has 26B total assets under management and has yielded an average annual return of 14.80% over the past 10 years. The fund has a dividend yield of 2.89% with an expense ratio of 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%.

SCHD’s dividend yield is 2.89% higher than that of ARKK (2.89% vs. 0.0%). Also, SCHD yielded on average 40.65% less per year over the past decade (14.80% vs. 55.45%). The expense ratio of SCHD is 0.69 percentage points lower than ARKK’s (0.06% vs. 0.75%).

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Fund Composition

Industry Exposure

SCHD vs. ARKK - Industry Exposure

SCHD ARKK
Technology 16.26% 30.5%
Industrials 18.05% 2.11%
Energy 1.87% 0.0%
Communication Services 4.96% 25.01%
Utilities 0.0% 0.0%
Healthcare 12.64% 29.47%
Consumer Defensive 14.04% 0.93%
Real Estate 0.0% 0.51%
Financial Services 21.69% 0.04%
Consumer Cyclical 8.36% 11.42%
Basic Materials 2.13% 0.0%

The Schwab U.S. Dividend Equity ETF (SCHD) has the most exposure to the Financial Services sector at 21.69%. This is followed by Industrials and Technology at 18.05% and 16.26% respectively. Utilities (0.0%), Energy (1.87%), and Basic Materials (2.13%) only make up 4.00% of the fund’s total assets.

SCHD’s mid-section with moderate exposure is comprised of Communication Services, Consumer Cyclical, Healthcare, Consumer Defensive, and Technology stocks at 4.96%, 8.36%, 12.64%, 14.04%, and 16.26%.

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%.

SCHD is 21.65% more exposed to the Financial Services sector than ARKK (21.69% vs 0.04%). SCHD’s exposure to Industrials and Technology stocks is 15.94% higher and 14.24% lower respectively (18.05% vs. 2.11% and 16.26% vs. 30.5%). In total, Utilities, Energy, and Basic Materials also make up 4.00% more of the fund’s holdings compared to ARKK (4.00% vs. 0.00%).

Holdings

SCHD - Holdings

SCHD Holdings Weight
Merck & Co Inc 4.24%
The Home Depot Inc 4.19%
Texas Instruments Inc 4.16%
Broadcom Inc 4.15%
Amgen Inc 4.11%
PepsiCo Inc 4.09%
BlackRock Inc 4.05%
Pfizer Inc 3.97%
Verizon Communications Inc 3.96%
Cisco Systems Inc 3.96%

SCHD’s Top Holdings are Merck & Co Inc, The Home Depot Inc, Texas Instruments Inc, Broadcom Inc, and Amgen Inc at 4.24%, 4.19%, 4.16%, 4.15%, and 4.11%.

PepsiCo Inc (4.09%), BlackRock Inc (4.05%), and Pfizer Inc (3.97%) have a slightly smaller but still significant weight. Verizon Communications Inc and Cisco Systems Inc are also represented in the SCHD’s holdings at 3.96% and 3.96%.

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%.

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Risk Analysis

SCHD ARKK
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 Schwab U.S. Dividend Equity ETF (SCHD) has a Treynor Ratio of 0 with a Alpha of 0 and a R-squared of 0. Its Beta is 0 while SCHD’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.

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

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

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Performance

Annual Returns

SCHD vs. ARKK - Annual Returns

Year SCHD ARKK
2020 15.11% 152.52%
2019 27.28% 35.73%
2018 -5.46% 3.58%
2017 20.88% 87.38%
2016 16.25% -1.96%
2015 -0.21% 3.76%
2014 11.66% 0.0%
2013 32.9% 0.0%
2012 11.4% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

SCHD had its best year in 2013 with an annual return of 32.9%. SCHD’s worst year over the past decade yielded -5.46% and occurred in 2018. In most years the Schwab U.S. Dividend Equity ETF provided moderate returns such as in 2012, 2014, and 2020 where annual returns amounted to 11.4%, 11.66%, and 15.11% 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

SCHD vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHD $10,000 $19,464 14.80%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in SCHD would have resulted in a final balance of $19,464. This is a profit of $9,464 over 5 years and amounts to a compound annual growth rate (CAGR) of 14.80%.

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%.

SCHD’s CAGR is 40.65 percentage points lower than that of ARKK and as a result, would have yielded $45,754 less on a $10,000 investment. Thus, SCHD performed worse than ARKK by 40.65% annually.


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