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VCIT vs. ARKK: What’s The Difference?

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

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

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

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Summary

VCITARKK
NameVanguard Intermediate-Term Corporate Bond Index Fund ETF SharesARK Innovation ETF
CategoryCorporate BondMid-Cap Growth
IssuerVanguardARK ETF Trust
AUM48.39B25.52B
Avg. Return5.84%55.45%
Div. Yield2.33%0.0%
Expense Ratio0.05%0.75%

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) is a Corporate Bond fund that is issued by Vanguard. It currently has 48.39B total assets under management and has yielded an average annual return of 5.84% over the past 10 years. The fund has a dividend yield of 2.33% 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%.

VCIT’s dividend yield is 2.33% higher than that of ARKK (2.33% vs. 0.0%). Also, VCIT yielded on average 49.61% less per year over the past decade (5.84% vs. 55.45%). The expense ratio of VCIT is 0.70 percentage points lower than ARKK’s (0.05% vs. 0.75%).

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Fund Composition

Holdings

VCIT - Holdings

VCIT Bond SectorsWeight
BBB55.28%
A37.85%
AA5.22%
AAA1.57%
Below B0.08%
Others0.0%
B0.0%
BB0.0%
US Government0.0%

VCIT’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 55.28%, 37.85%, 5.22%, 1.57%, and 0.08%. The fund is less weighted towards Others (0.0%), B (0.0%), and BB (0.0%) rated bonds.

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

VCITARKK
Mean Return0.440
R-squared63.180
Std. Deviation5.080
Alpha0.890
Beta1.350
Sharpe Ratio0.910
Treynor Ratio3.430

The Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares (VCIT) has a Standard Deviation of 5.08 with a R-squared of 63.18 and a Treynor Ratio of 3.43. Its Alpha is 0.89 while VCIT’s Beta is 1.35. Furthermore, the fund has a Mean Return of 0.44 and a Sharpe Ratio of 0.91.

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

VCIT’s Mean Return is 0.44 points higher than that of ARKK and its R-squared is 63.18 points higher. With a Standard Deviation of 5.08, VCIT is slightly more volatile than ARKK. The Alpha and Beta of VCIT are 0.89 points higher and 1.35 points higher than ARKK’s Alpha and Beta.

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Performance

Annual Returns

VCIT vs. ARKK - Annual Returns

YearVCITARKK
20209.55%152.52%
201913.97%35.73%
2018-1.75%3.58%
20175.5%87.38%
20165.3%-1.96%
20150.88%3.76%
20147.47%0.0%
2013-1.8%0.0%
201211.36%0.0%
20117.94%0.0%
201010.65%0.0%

VCIT had its best year in 2019 with an annual return of 13.97%. VCIT’s worst year over the past decade yielded -1.8% and occurred in 2013. In most years the Vanguard Intermediate-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2014, and 2011 where annual returns amounted to 5.5%, 7.47%, and 7.94% 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

VCIT vs. ARKK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VCIT$10,000$13,6275.84%
ARKK$10,000$65,21855.45%

A $10,000 investment in VCIT would have resulted in a final balance of $13,627. This is a profit of $3,627 over 5 years and amounts to a compound annual growth rate (CAGR) of 5.84%.

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%.

VCIT’s CAGR is 49.61 percentage points lower than that of ARKK and as a result, would have yielded $51,591 less on a $10,000 investment. Thus, VCIT performed worse than ARKK by 49.61% annually.


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