VT vs. ARKK: What’s The Difference?

The Vanguard Total World Stock Index Fund ETF Shares (VT) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. VT is a Vanguard N/A fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between VT and ARKK? And which fund is better?

The expense ratio of VT is 0.67 percentage points lower than ARKK’s (0.08% vs. 0.75%). VT also has a lower exposure to the technology sector and a higher standard deviation. Overall, VT has provided lower returns than ARKK over the past 5 years.

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

Summary

VT ARKK
Name Vanguard Total World Stock Index Fund ETF Shares ARK Innovation ETF
Category N/A Mid-Cap Growth
Issuer Vanguard ARK ETF Trust
AUM 30.44B 25.52B
Avg. Return 10.42% 55.45%
Div. Yield 1.65% 0.0%
Expense Ratio 0.08% 0.75%

The Vanguard Total World Stock Index Fund ETF Shares (VT) is a N/A fund that is issued by Vanguard. It currently has 30.44B total assets under management and has yielded an average annual return of 10.42% over the past 10 years. The fund has a dividend yield of 1.65% 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%.

VT’s dividend yield is 1.65% higher than that of ARKK (1.65% vs. 0.0%). Also, VT yielded on average 45.03% less per year over the past decade (10.42% vs. 55.45%). The expense ratio of VT is 0.67 percentage points lower than ARKK’s (0.08% vs. 0.75%).

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Fund Composition

Industry Exposure

VT vs. ARKK - Industry Exposure

VT ARKK
Technology 19.63% 30.5%
Industrials 10.7% 2.11%
Energy 3.48% 0.0%
Communication Services 9.02% 25.01%
Utilities 2.6% 0.0%
Healthcare 11.58% 29.47%
Consumer Defensive 6.71% 0.93%
Real Estate 3.64% 0.51%
Financial Services 15.36% 0.04%
Consumer Cyclical 12.32% 11.42%
Basic Materials 4.97% 0.0%

The Vanguard Total World Stock Index Fund ETF Shares (VT) has the most exposure to the Technology sector at 19.63%. This is followed by Financial Services and Consumer Cyclical at 15.36% and 12.32% respectively. Energy (3.48%), Real Estate (3.64%), and Basic Materials (4.97%) only make up 12.09% of the fund’s total assets.

VT’s mid-section with moderate exposure is comprised of Consumer Defensive, Communication Services, Industrials, Healthcare, and Consumer Cyclical stocks at 6.71%, 9.02%, 10.7%, 11.58%, and 12.32%.

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%.

VT is 10.87% less exposed to the Technology sector than ARKK (19.63% vs 30.5%). VT’s exposure to Financial Services and Consumer Cyclical stocks is 15.32% higher and 0.90% higher respectively (15.36% vs. 0.04% and 12.32% vs. 11.42%). In total, Energy, Real Estate, and Basic Materials also make up 11.58% more of the fund’s holdings compared to ARKK (12.09% vs. 0.51%).

Holdings

VT - Holdings

VT Holdings Weight
Apple Inc 2.85%
Microsoft Corp 2.71%
Amazon.com Inc 1.98%
Facebook Inc Class A 1.1%
Alphabet Inc Class A 0.97%
Alphabet Inc Class C 0.95%
Tesla Inc 0.7%
NVIDIA Corp 0.64%
JPMorgan Chase & Co 0.62%
Tencent Holdings Ltd 0.6%

VT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 2.85%, 2.71%, 1.98%, 1.1%, and 0.97%.

Alphabet Inc Class C (0.95%), Tesla Inc (0.7%), and NVIDIA Corp (0.64%) have a slightly smaller but still significant weight. JPMorgan Chase & Co and Tencent Holdings Ltd are also represented in the VT’s holdings at 0.62% and 0.6%.

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%.

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Risk Analysis

VT ARKK
Mean Return 0.9 0
R-squared 99.35 0
Std. Deviation 14.19 0
Alpha 0.2 0
Beta 1.01 0
Sharpe Ratio 0.71 0
Treynor Ratio 9.5 0

The Vanguard Total World Stock Index Fund ETF Shares (VT) has a Beta of 1.01 with a Sharpe Ratio of 0.71 and a Alpha of 0.2. Its Treynor Ratio is 9.5 while VT’s Mean Return is 0.9. Furthermore, the fund has a R-squared of 99.35 and a Standard Deviation of 14.19.

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

VT’s Mean Return is 0.90 points higher than that of ARKK and its R-squared is 99.35 points higher. With a Standard Deviation of 14.19, VT is slightly more volatile than ARKK. The Alpha and Beta of VT are 0.20 points higher and 1.01 points higher than ARKK’s Alpha and Beta.

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Performance

Annual Returns

VT vs. ARKK - Annual Returns

Year VT ARKK
2020 16.74% 152.52%
2019 26.8% 35.73%
2018 -9.67% 3.58%
2017 24.19% 87.38%
2016 8.77% -1.96%
2015 -1.88% 3.76%
2014 3.97% 0.0%
2013 22.98% 0.0%
2012 17.33% 0.0%
2011 -7.71% 0.0%
2010 13.05% 0.0%

VT had its best year in 2019 with an annual return of 26.8%. VT’s worst year over the past decade yielded -9.67% and occurred in 2018. In most years the Vanguard Total World Stock Index Fund ETF Shares provided moderate returns such as in 2016, 2010, and 2020 where annual returns amounted to 8.77%, 13.05%, and 16.74% 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

VT vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VT $10,000 $18,062 10.42%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in VT would have resulted in a final balance of $18,062. This is a profit of $8,062 over 5 years and amounts to a compound annual growth rate (CAGR) of 10.42%.

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%.

VT’s CAGR is 45.03 percentage points lower than that of ARKK and as a result, would have yielded $47,156 less on a $10,000 investment. Thus, VT performed worse than ARKK by 45.03% annually.


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