The Vanguard Information Technology Index Fund ETF Shares (VGT) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. VGT is a Vanguard Technology fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between VGT and ARKK? And which fund is better?
The expense ratio of VGT is 0.65 percentage points lower than ARKK’s (0.1% vs. 0.75%). VGT also has a higher exposure to the technology sector and a higher standard deviation. Overall, VGT has provided lower returns than ARKK over the past ten years.
In this article, we’ll compare VGT vs. ARKK. We’ll look at annual returns and holdings, as well as at their performance and portfolio growth. Moreover, I’ll also discuss VGT’s and ARKK’s risk metrics, fund composition, and industry exposure and examine how these affect their overall returns.
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Summary
| VGT | ARKK | |
| Name | Vanguard Information Technology Index Fund ETF Shares | ARK Innovation ETF |
| Category | Technology | Mid-Cap Growth |
| Issuer | Vanguard | ARK ETF Trust |
| AUM | 54.13B | 25.52B |
| Avg. Return | 20.84% | 55.45% |
| Div. Yield | 0.66% | 0.0% |
| Expense Ratio | 0.1% | 0.75% |
The Vanguard Information Technology Index Fund ETF Shares (VGT) is a Technology fund that is issued by Vanguard. It currently has 54.13B total assets under management and has yielded an average annual return of 20.84% over the past 10 years. The fund has a dividend yield of 0.66% with an expense ratio of 0.1%.
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%.
VGT’s dividend yield is 0.66% higher than that of ARKK (0.66% vs. 0.0%). Also, VGT yielded on average 34.61% less per year over the past decade (20.84% vs. 55.45%). The expense ratio of VGT is 0.65 percentage points lower than ARKK’s (0.1% vs. 0.75%).
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Fund Composition
Industry Exposure
| VGT | ARKK | |
| Technology | 88.89% | 30.5% |
| Industrials | 1.67% | 2.11% |
| Energy | 0.0% | 0.0% |
| Communication Services | 0.61% | 25.01% |
| Utilities | 0.0% | 0.0% |
| Healthcare | 0.0% | 29.47% |
| Consumer Defensive | 0.0% | 0.93% |
| Real Estate | 0.0% | 0.51% |
| Financial Services | 8.83% | 0.04% |
| Consumer Cyclical | 0.0% | 11.42% |
| Basic Materials | 0.0% | 0.0% |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has the most exposure to the Technology sector at 88.89%. This is followed by Financial Services and Industrials at 8.83% and 1.67% respectively. Consumer Cyclical (0.0%), Real Estate (0.0%), and Consumer Defensive (0.0%) only make up 0.00% of the fund’s total assets.
VGT’s mid-section with moderate exposure is comprised of Healthcare, Utilities, Energy, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.61%, and 1.67%.
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%.
VGT is 58.39% more exposed to the Technology sector than ARKK (88.89% vs 30.5%). VGT’s exposure to Financial Services and Industrials stocks is 8.79% higher and 0.44% lower respectively (8.83% vs. 0.04% and 1.67% vs. 2.11%). In total, Consumer Cyclical, Real Estate, and Consumer Defensive also make up 12.86% less of the fund’s holdings compared to ARKK (0.00% vs. 12.86%).
Holdings
| VGT Holdings | Weight |
| Apple Inc | 19.58% |
| Microsoft Corp | 16.53% |
| NVIDIA Corp | 4.22% |
| Visa Inc Class A | 3.16% |
| PayPal Holdings Inc | 2.76% |
| Mastercard Inc Class A | 2.76% |
| Adobe Inc | 2.39% |
| Intel Corp | 1.94% |
| Salesforce.com Inc | 1.91% |
| Cisco Systems Inc | 1.9% |
VGT’s Top Holdings are Apple Inc, Microsoft Corp, NVIDIA Corp, Visa Inc Class A, and PayPal Holdings Inc at 19.58%, 16.53%, 4.22%, 3.16%, and 2.76%.
Mastercard Inc Class A (2.76%), Adobe Inc (2.39%), and Intel Corp (1.94%) have a slightly smaller but still significant weight. Salesforce.com Inc and Cisco Systems Inc are also represented in the VGT’s holdings at 1.91% and 1.9%.
| 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
| VGT | ARKK | |
| Mean Return | 1.76 | 0 |
| R-squared | 74.84 | 0 |
| Std. Deviation | 16.61 | 0 |
| Alpha | 10.41 | 0 |
| Beta | 1.02 | 0 |
| Sharpe Ratio | 1.23 | 0 |
| Treynor Ratio | 20.55 | 0 |
The Vanguard Information Technology Index Fund ETF Shares (VGT) has a Standard Deviation of 16.61 with a Sharpe Ratio of 1.23 and a Beta of 1.02. Its Mean Return is 1.76 while VGT’s Treynor Ratio is 20.55. Furthermore, the fund has a R-squared of 74.84 and a Alpha of 10.41.
The ARK Innovation ETF (ARKK) has a Mean Return of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Alpha is 0 while ARKK’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Standard Deviation of 0.
VGT’s Mean Return is 1.76 points higher than that of ARKK and its R-squared is 74.84 points higher. With a Standard Deviation of 16.61, VGT is slightly more volatile than ARKK. The Alpha and Beta of VGT are 10.41 points higher and 1.02 points higher than ARKK’s Alpha and Beta.
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Performance
Annual Returns
| Year | VGT | ARKK |
| 2020 | 45.94% | 152.52% |
| 2019 | 48.68% | 35.73% |
| 2018 | 2.52% | 3.58% |
| 2017 | 37.07% | 87.38% |
| 2016 | 13.73% | -1.96% |
| 2015 | 5.02% | 3.76% |
| 2014 | 18.01% | 0.0% |
| 2013 | 30.91% | 0.0% |
| 2012 | 14.05% | 0.0% |
| 2011 | 0.52% | 0.0% |
| 2010 | 12.74% | 0.0% |
VGT had its best year in 2019 with an annual return of 48.68%. VGT’s worst year over the past decade yielded 0.52% and occurred in 2011. In most years the Vanguard Information Technology Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2014 where annual returns amounted to 13.73%, 14.05%, and 18.01% 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 |
| VGT | $10,000 | $34,677 | 20.84% |
| ARKK | $10,000 | $65,218 | 55.45% |
A $10,000 investment in VGT would have resulted in a final balance of $34,677. This is a profit of $24,677 over 5 years and amounts to a compound annual growth rate (CAGR) of 20.84%.
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%.
VGT’s CAGR is 34.61 percentage points lower than that of ARKK and as a result, would have yielded $30,541 less on a $10,000 investment. Thus, VGT performed worse than ARKK by 34.61% annually.
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