The Vanguard Mid-Cap Index Fund ETF Shares (VO) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. VO is a Vanguard Mid-Cap Blend fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between VO and ARKK? And which fund is better?
The expense ratio of VO is 0.71 percentage points lower than ARKK’s (0.04% vs. 0.75%). VO also has a lower exposure to the technology sector and a higher standard deviation. Overall, VO has provided lower returns than ARKK over the past ten years.
In this article, we’ll compare VO vs. ARKK. We’ll look at fund composition and industry exposure, as well as at their holdings and annual returns. Moreover, I’ll also discuss VO’s and ARKK’s performance, risk metrics, and portfolio growth and examine how these affect their overall returns.
|Name||Vanguard Mid-Cap Index Fund ETF Shares||ARK Innovation ETF|
|Category||Mid-Cap Blend||Mid-Cap Growth|
|Issuer||Vanguard||ARK ETF Trust|
The Vanguard Mid-Cap Index Fund ETF Shares (VO) is a Mid-Cap Blend fund that is issued by Vanguard. It currently has 154.08B total assets under management and has yielded an average annual return of 14.34% over the past 10 years. The fund has a dividend yield of 1.23% with an expense ratio of 0.04%.
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%.
VO’s dividend yield is 1.23% higher than that of ARKK (1.23% vs. 0.0%). Also, VO yielded on average 41.11% less per year over the past decade (14.34% vs. 55.45%). The expense ratio of VO is 0.71 percentage points lower than ARKK’s (0.04% vs. 0.75%).
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has the most exposure to the Technology sector at 22.01%. This is followed by Healthcare and Consumer Cyclical at 13.03% and 12.12% respectively. Basic Materials (3.36%), Energy (3.82%), and Utilities (5.12%) only make up 12.30% of the fund’s total assets.
VO’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Industrials, and Consumer Cyclical stocks at 5.61%, 8.67%, 11.08%, 11.92%, and 12.12%.
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%.
VO is 8.49% less exposed to the Technology sector than ARKK (22.01% vs 30.5%). VO’s exposure to Healthcare and Consumer Cyclical stocks is 16.44% lower and 0.70% higher respectively (13.03% vs. 29.47% and 12.12% vs. 11.42%). In total, Basic Materials, Energy, and Utilities also make up 12.30% more of the fund’s holdings compared to ARKK (12.30% vs. 0.00%).
|IDEXX Laboratories Inc||0.78%|
|Marvell Technology Inc||0.68%|
|IQVIA Holdings Inc||0.68%|
|Chipotle Mexican Grill Inc||0.63%|
|Veeva Systems Inc Class A||0.62%|
|Digital Realty Trust Inc||0.62%|
|Carrier Global Corp Ordinary Shares||0.61%|
VO’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Marvell Technology Inc, IQVIA Holdings Inc, and Chipotle Mexican Grill Inc at 0.78%, 0.75%, 0.68%, 0.68%, and 0.63%.
Veeva Systems Inc Class A (0.62%), Digital Realty Trust Inc (0.62%), and Centene Corp (0.62%) have a slightly smaller but still significant weight. Aptiv PLC and Carrier Global Corp Ordinary Shares are also represented in the VO’s holdings at 0.62% and 0.61%.
|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%.
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The Vanguard Mid-Cap Index Fund ETF Shares (VO) has a Sharpe Ratio of 0.83 with a Beta of 1.11 and a Alpha of -2.71. Its Treynor Ratio is 11.32 while VO’s Mean Return is 1.14. Furthermore, the fund has a R-squared of 92.22 and a Standard Deviation of 15.65.
The ARK Innovation ETF (ARKK) has a Alpha of 0 with a Mean Return of 0 and a Treynor Ratio of 0. Its Beta is 0 while ARKK’s Standard Deviation is 0. Furthermore, the fund has a R-squared of 0 and a Sharpe Ratio of 0.
VO’s Mean Return is 1.14 points higher than that of ARKK and its R-squared is 92.22 points higher. With a Standard Deviation of 15.65, VO is slightly more volatile than ARKK. The Alpha and Beta of VO are 2.71 points lower and 1.11 points higher than ARKK’s Alpha and Beta.
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VO had its best year in 2013 with an annual return of 35.15%. VO’s worst year over the past decade yielded -9.21% and occurred in 2018. In most years the Vanguard Mid-Cap Index Fund ETF Shares provided moderate returns such as in 2014, 2012, and 2020 where annual returns amounted to 13.76%, 15.98%, and 18.22% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in VO would have resulted in a final balance of $18,655. This is a profit of $8,655 over 5 years and amounts to a compound annual growth rate (CAGR) of 14.34%.
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%.
VO’s CAGR is 41.11 percentage points lower than that of ARKK and as a result, would have yielded $46,563 less on a $10,000 investment. Thus, VO performed worse than ARKK by 41.11% annually.
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