SCHX vs. ARKK: What’s The Difference?

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

The expense ratio of SCHX is 0.72 percentage points lower than ARKK’s (0.03% vs. 0.75%). SCHX also has a lower exposure to the technology sector and a higher standard deviation. Overall, SCHX has provided lower returns than ARKK over the past ten years.

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

Summary

SCHX ARKK
Name Schwab U.S. Large-Cap ETF ARK Innovation ETF
Category Large Blend Mid-Cap Growth
Issuer Schwab ETFs ARK ETF Trust
AUM 30.89B 25.52B
Avg. Return 14.60% 55.45%
Div. Yield 1.41% 0.0%
Expense Ratio 0.03% 0.75%

The Schwab U.S. Large-Cap ETF (SCHX) is a Large Blend fund that is issued by Schwab ETFs. It currently has 30.89B total assets under management and has yielded an average annual return of 14.60% over the past 10 years. The fund has a dividend yield of 1.41% with an expense ratio of 0.03%.

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%.

SCHX’s dividend yield is 1.41% higher than that of ARKK (1.41% vs. 0.0%). Also, SCHX yielded on average 40.85% less per year over the past decade (14.60% vs. 55.45%). The expense ratio of SCHX is 0.72 percentage points lower than ARKK’s (0.03% vs. 0.75%).

Fund Composition

Industry Exposure

SCHX vs. ARKK - Industry Exposure

SCHX ARKK
Technology 25.13% 30.5%
Industrials 8.65% 2.11%
Energy 2.72% 0.0%
Communication Services 11.26% 25.01%
Utilities 2.37% 0.0%
Healthcare 13.04% 29.47%
Consumer Defensive 5.97% 0.93%
Real Estate 3.13% 0.51%
Financial Services 13.82% 0.04%
Consumer Cyclical 11.63% 11.42%
Basic Materials 2.28% 0.0%

The Schwab U.S. Large-Cap ETF (SCHX) has the most exposure to the Technology sector at 25.13%. This is followed by Financial Services and Healthcare at 13.82% and 13.04% respectively. Utilities (2.37%), Energy (2.72%), and Real Estate (3.13%) only make up 8.22% of the fund’s total assets.

SCHX’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.65%, 11.26%, 11.63%, and 13.04%.

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%.

SCHX is 5.37% less exposed to the Technology sector than ARKK (25.13% vs 30.5%). SCHX’s exposure to Financial Services and Healthcare stocks is 13.78% higher and 16.43% lower respectively (13.82% vs. 0.04% and 13.04% vs. 29.47%). In total, Utilities, Energy, and Real Estate also make up 7.71% more of the fund’s holdings compared to ARKK (8.22% vs. 0.51%).

Holdings

SCHX - Holdings

SCHX Holdings Weight
Apple Inc 5.37%
Microsoft Corp 5.1%
Amazon.com Inc 3.69%
Facebook Inc A 2.08%
Alphabet Inc A 1.84%
Alphabet Inc Class C 1.78%
Berkshire Hathaway Inc Class B 1.32%
Tesla Inc 1.31%
NVIDIA Corp 1.25%
JPMorgan Chase & Co 1.18%

SCHX’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc A at 5.37%, 5.1%, 3.69%, 2.08%, and 1.84%.

Alphabet Inc Class C (1.78%), Berkshire Hathaway Inc Class B (1.32%), and Tesla Inc (1.31%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the SCHX’s holdings at 1.25% and 1.18%.

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

SCHX ARKK
Mean Return 1.24 0
R-squared 99.83 0
Std. Deviation 13.8 0
Alpha -0.14 0
Beta 1.02 0
Sharpe Ratio 1.03 0
Treynor Ratio 14.06 0

The Schwab U.S. Large-Cap ETF (SCHX) has a Sharpe Ratio of 1.03 with a Beta of 1.02 and a Treynor Ratio of 14.06. Its R-squared is 99.83 while SCHX’s Mean Return is 1.24. Furthermore, the fund has a Standard Deviation of 13.8 and a Alpha of -0.14.

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

SCHX’s Mean Return is 1.24 points higher than that of ARKK and its R-squared is 99.83 points higher. With a Standard Deviation of 13.8, SCHX is slightly more volatile than ARKK. The Alpha and Beta of SCHX are 0.14 points lower and 1.02 points higher than ARKK’s Alpha and Beta.

Performance

Annual Returns

SCHX vs. ARKK - Annual Returns

Year SCHX ARKK
2020 20.9% 152.52%
2019 31.4% 35.73%
2018 -4.52% 3.58%
2017 21.91% 87.38%
2016 11.78% -1.96%
2015 1.02% 3.76%
2014 13.33% 0.0%
2013 32.54% 0.0%
2012 16.06% 0.0%
2011 1.61% 0.0%
2010 15.88% 0.0%

SCHX had its best year in 2013 with an annual return of 32.54%. SCHX’s worst year over the past decade yielded -4.52% and occurred in 2018. In most years the Schwab U.S. Large-Cap ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.33%, 15.88%, and 16.06% 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

SCHX vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
SCHX $10,000 $20,669 14.60%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in SCHX would have resulted in a final balance of $20,669. This is a profit of $10,669 over 5 years and amounts to a compound annual growth rate (CAGR) of 14.60%.

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%.

SCHX’s CAGR is 40.85 percentage points lower than that of ARKK and as a result, would have yielded $44,549 less on a $10,000 investment. Thus, SCHX performed worse than ARKK by 40.85% annually.


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