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SCHF vs. ARKK: What’s The Difference?

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

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

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

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Summary

SCHFARKK
NameSchwab International Equity ETFARK Innovation ETF
CategoryForeign Large BlendMid-Cap Growth
IssuerSchwab ETFsARK ETF Trust
AUM26.99B25.52B
Avg. Return6.43%55.45%
Div. Yield2.16%0.0%
Expense Ratio0.06%0.75%

The Schwab International Equity ETF (SCHF) is a Foreign Large Blend fund that is issued by Schwab ETFs. It currently has 26.99B total assets under management and has yielded an average annual return of 6.43% over the past 10 years. The fund has a dividend yield of 2.16% 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%.

SCHF’s dividend yield is 2.16% higher than that of ARKK (2.16% vs. 0.0%). Also, SCHF yielded on average 49.02% less per year over the past decade (6.43% vs. 55.45%). The expense ratio of SCHF is 0.69 percentage points lower than ARKK’s (0.06% vs. 0.75%).

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Fund Composition

Industry Exposure

SCHF vs. ARKK - Industry Exposure

SCHFARKK
Technology11.55%30.5%
Industrials14.86%2.11%
Energy4.23%0.0%
Communication Services5.65%25.01%
Utilities3.09%0.0%
Healthcare11.05%29.47%
Consumer Defensive9.41%0.93%
Real Estate3.17%0.51%
Financial Services17.85%0.04%
Consumer Cyclical10.87%11.42%
Basic Materials8.26%0.0%

The Schwab International Equity ETF (SCHF) has the most exposure to the Financial Services sector at 17.85%. This is followed by Industrials and Technology at 14.86% and 11.55% respectively. Real Estate (3.17%), Energy (4.23%), and Communication Services (5.65%) only make up 13.05% of the fund’s total assets.

SCHF’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Consumer Cyclical, Healthcare, and Technology stocks at 8.26%, 9.41%, 10.87%, 11.05%, and 11.55%.

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%.

SCHF is 17.81% more exposed to the Financial Services sector than ARKK (17.85% vs 0.04%). SCHF’s exposure to Industrials and Technology stocks is 12.75% higher and 18.95% lower respectively (14.86% vs. 2.11% and 11.55% vs. 30.5%). In total, Real Estate, Energy, and Communication Services also make up 12.47% less of the fund’s holdings compared to ARKK (13.05% vs. 25.52%).

Holdings

SCHF - Holdings

SCHF HoldingsWeight
Nestle SA1.66%
Samsung Electronics Co Ltd1.6%
ASML Holding NV1.29%
Roche Holding AG1.24%
Toyota Motor Corp1.02%
LVMH Moet Hennessy Louis Vuitton SE0.93%
Novartis AG0.92%
Shopify Inc A0.78%
AstraZeneca PLC0.75%
SAP SE0.74%

SCHF’s Top Holdings are Nestle SA, Samsung Electronics Co Ltd, ASML Holding NV, Roche Holding AG, and Toyota Motor Corp at 1.66%, 1.6%, 1.29%, 1.24%, and 1.02%.

LVMH Moet Hennessy Louis Vuitton SE (0.93%), Novartis AG (0.92%), and Shopify Inc A (0.78%) have a slightly smaller but still significant weight. AstraZeneca PLC and SAP SE are also represented in the SCHF’s holdings at 0.75% and 0.74%.

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%.

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Risk Analysis

SCHFARKK
Mean Return0.580
R-squared98.160
Std. Deviation15.080
Alpha0.530
Beta0.990
Sharpe Ratio0.420
Treynor Ratio5.390

The Schwab International Equity ETF (SCHF) has a Sharpe Ratio of 0.42 with a Treynor Ratio of 5.39 and a Standard Deviation of 15.08. Its R-squared is 98.16 while SCHF’s Alpha is 0.53. Furthermore, the fund has a Beta of 0.99 and a Mean Return of 0.58.

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

SCHF’s Mean Return is 0.58 points higher than that of ARKK and its R-squared is 98.16 points higher. With a Standard Deviation of 15.08, SCHF is slightly more volatile than ARKK. The Alpha and Beta of SCHF are 0.53 points higher and 0.99 points higher than ARKK’s Alpha and Beta.

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Performance

Annual Returns

SCHF vs. ARKK - Annual Returns

YearSCHFARKK
20209.86%152.52%
201922.15%35.73%
2018-14.39%3.58%
201725.83%87.38%
20162.88%-1.96%
2015-2.44%3.76%
2014-4.44%0.0%
201320.03%0.0%
201217.12%0.0%
2011-12.32%0.0%
20108.6%0.0%

SCHF had its best year in 2017 with an annual return of 25.83%. SCHF’s worst year over the past decade yielded -14.39% and occurred in 2018. In most years the Schwab International Equity ETF provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 2.88%, 8.6%, and 9.86% 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

SCHF vs. ARKK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
SCHF$10,000$14,8726.43%
ARKK$10,000$65,21855.45%

A $10,000 investment in SCHF would have resulted in a final balance of $14,872. This is a profit of $4,872 over 5 years and amounts to a compound annual growth rate (CAGR) of 6.43%.

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%.

SCHF’s CAGR is 49.02 percentage points lower than that of ARKK and as a result, would have yielded $50,346 less on a $10,000 investment. Thus, SCHF performed worse than ARKK by 49.02% annually.


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