The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. VEU is a Vanguard Foreign Large Blend fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between VEU and ARKK? And which fund is better?
The expense ratio of VEU is 0.67 percentage points lower than ARKK’s (0.08% vs. 0.75%). VEU also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VEU has provided lower returns than ARKK over the past ten years.
In this article, we’ll compare VEU vs. ARKK. We’ll look at performance and annual returns, as well as at their risk metrics and holdings. Moreover, I’ll also discuss VEU’s and ARKK’s fund composition, industry exposure, and portfolio growth and examine how these affect their overall returns.
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Summary
| VEU | ARKK | |
| Name | Vanguard FTSE All-World ex-US Index Fund ETF Shares | ARK Innovation ETF |
| Category | Foreign Large Blend | Mid-Cap Growth |
| Issuer | Vanguard | ARK ETF Trust |
| AUM | 53.64B | 25.52B |
| Avg. Return | 6.64% | 55.45% |
| Div. Yield | 2.31% | 0.0% |
| Expense Ratio | 0.08% | 0.75% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) is a Foreign Large Blend fund that is issued by Vanguard. It currently has 53.64B total assets under management and has yielded an average annual return of 6.64% over the past 10 years. The fund has a dividend yield of 2.31% with an expense ratio of 0.08%.
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%.
VEU’s dividend yield is 2.31% higher than that of ARKK (2.31% vs. 0.0%). Also, VEU yielded on average 48.81% less per year over the past decade (6.64% vs. 55.45%). The expense ratio of VEU is 0.67 percentage points lower than ARKK’s (0.08% vs. 0.75%).
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Fund Composition
Industry Exposure
| VEU | ARKK | |
| Technology | 12.94% | 30.5% |
| Industrials | 12.19% | 2.11% |
| Energy | 4.69% | 0.0% |
| Communication Services | 7.44% | 25.01% |
| Utilities | 2.89% | 0.0% |
| Healthcare | 9.34% | 29.47% |
| Consumer Defensive | 8.28% | 0.93% |
| Real Estate | 3.04% | 0.51% |
| Financial Services | 18.46% | 0.04% |
| Consumer Cyclical | 12.57% | 11.42% |
| Basic Materials | 8.17% | 0.0% |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has the most exposure to the Financial Services sector at 18.46%. This is followed by Technology and Consumer Cyclical at 12.94% and 12.57% respectively. Real Estate (3.04%), Energy (4.69%), and Communication Services (7.44%) only make up 15.17% of the fund’s total assets.
VEU’s mid-section with moderate exposure is comprised of Basic Materials, Consumer Defensive, Healthcare, Industrials, and Consumer Cyclical stocks at 8.17%, 8.28%, 9.34%, 12.19%, and 12.57%.
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%.
VEU is 18.42% more exposed to the Financial Services sector than ARKK (18.46% vs 0.04%). VEU’s exposure to Technology and Consumer Cyclical stocks is 17.56% lower and 1.15% higher respectively (12.94% vs. 30.5% and 12.57% vs. 11.42%). In total, Real Estate, Energy, and Communication Services also make up 10.35% less of the fund’s holdings compared to ARKK (15.17% vs. 25.52%).
Holdings
| VEU Holdings | Weight |
| Tencent Holdings Ltd | 1.57% |
| Alibaba Group Holding Ltd Ordinary Shares | 1.4% |
| Nestle SA | 1.22% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.98% |
| ASML Holding NV | 0.95% |
| Taiwan Semiconductor Manufacturing Co Ltd ADR | 0.91% |
| Roche Holding AG | 0.91% |
| Toyota Motor Corp | 0.75% |
| LVMH Moet Hennessy Louis Vuitton SE | 0.68% |
| Novartis AG | 0.67% |
VEU’s Top Holdings are Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Nestle SA, Taiwan Semiconductor Manufacturing Co Ltd, and ASML Holding NV at 1.57%, 1.4%, 1.22%, 0.98%, and 0.95%.
Taiwan Semiconductor Manufacturing Co Ltd ADR (0.91%), Roche Holding AG (0.91%), and Toyota Motor Corp (0.75%) have a slightly smaller but still significant weight. LVMH Moet Hennessy Louis Vuitton SE and Novartis AG are also represented in the VEU’s holdings at 0.68% and 0.67%.
| 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
| VEU | ARKK | |
| Mean Return | 0.56 | 0 |
| R-squared | 98.44 | 0 |
| Std. Deviation | 15.08 | 0 |
| Alpha | 0.28 | 0 |
| Beta | 0.99 | 0 |
| Sharpe Ratio | 0.4 | 0 |
| Treynor Ratio | 5.12 | 0 |
The Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) has a Treynor Ratio of 5.12 with a Sharpe Ratio of 0.4 and a Standard Deviation of 15.08. Its Beta is 0.99 while VEU’s Alpha is 0.28. Furthermore, the fund has a Mean Return of 0.56 and a R-squared of 98.44.
The ARK Innovation ETF (ARKK) has a Mean Return of 0 with a Beta of 0 and a Alpha of 0. Its Sharpe Ratio is 0 while ARKK’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.
VEU’s Mean Return is 0.56 points higher than that of ARKK and its R-squared is 98.44 points higher. With a Standard Deviation of 15.08, VEU is slightly more volatile than ARKK. The Alpha and Beta of VEU are 0.28 points higher and 0.99 points higher than ARKK’s Alpha and Beta.
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Performance
Annual Returns
| Year | VEU | ARKK |
| 2020 | 11.39% | 152.52% |
| 2019 | 21.63% | 35.73% |
| 2018 | -13.97% | 3.58% |
| 2017 | 27.27% | 87.38% |
| 2016 | 4.77% | -1.96% |
| 2015 | -4.67% | 3.76% |
| 2014 | -4.05% | 0.0% |
| 2013 | 14.5% | 0.0% |
| 2012 | 18.55% | 0.0% |
| 2011 | -14.25% | 0.0% |
| 2010 | 11.85% | 0.0% |
VEU had its best year in 2017 with an annual return of 27.27%. VEU’s worst year over the past decade yielded -14.25% and occurred in 2011. In most years the Vanguard FTSE All-World ex-US Index Fund ETF Shares provided moderate returns such as in 2016, 2020, and 2010 where annual returns amounted to 4.77%, 11.39%, and 11.85% 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
| Fund | Initial Balance | Final Balance | CAGR |
| VEU | $10,000 | $15,541 | 6.64% |
| ARKK | $10,000 | $65,218 | 55.45% |
A $10,000 investment in VEU would have resulted in a final balance of $15,541. This is a profit of $5,541 over 5 years and amounts to a compound annual growth rate (CAGR) of 6.64%.
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%.
VEU’s CAGR is 48.81 percentage points lower than that of ARKK and as a result, would have yielded $49,677 less on a $10,000 investment. Thus, VEU performed worse than ARKK by 48.81% annually.
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