The Vanguard Total Stock Market Index Fund ETF Shares (VTI) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. VTI is a Vanguard Large Blend fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between VTI and ARKK? And which fund is better?
The expense ratio of VTI is 0.72 percentage points lower than ARKK’s (0.03% vs. 0.75%). VTI also has a lower exposure to the technology sector and a higher standard deviation. Overall, VTI has provided lower returns than ARKK over the past ten years.
In this article, we’ll compare VTI vs. ARKK. We’ll look at risk metrics and fund composition, as well as at their industry exposure and annual returns. Moreover, I’ll also discuss VTI’s and ARKK’s holdings, portfolio growth, and performance and examine how these affect their overall returns.
Summary
| VTI | ARKK | |
| Name | Vanguard Total Stock Market Index Fund ETF Shares | ARK Innovation ETF |
| Category | Large Blend | Mid-Cap Growth |
| Issuer | Vanguard | ARK ETF Trust |
| AUM | 1.26T | 25.52B |
| Avg. Return | 14.70% | 55.45% |
| Div. Yield | 1.26% | 0.0% |
| Expense Ratio | 0.03% | 0.75% |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) is a Large Blend fund that is issued by Vanguard. It currently has 1.26T total assets under management and has yielded an average annual return of 14.70% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.03%.
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%.
VTI’s dividend yield is 1.26% higher than that of ARKK (1.26% vs. 0.0%). Also, VTI yielded on average 40.75% less per year over the past decade (14.70% vs. 55.45%). The expense ratio of VTI is 0.72 percentage points lower than ARKK’s (0.03% vs. 0.75%).
Fund Composition
Industry Exposure
| VTI | ARKK | |
| Technology | 24.1% | 30.5% |
| Industrials | 9.39% | 2.11% |
| Energy | 2.77% | 0.0% |
| Communication Services | 10.4% | 25.01% |
| Utilities | 2.29% | 0.0% |
| Healthcare | 13.64% | 29.47% |
| Consumer Defensive | 5.77% | 0.93% |
| Real Estate | 3.59% | 0.51% |
| Financial Services | 13.77% | 0.04% |
| Consumer Cyclical | 11.83% | 11.42% |
| Basic Materials | 2.44% | 0.0% |
The Vanguard Total Stock Market Index Fund ETF Shares (VTI) has the most exposure to the Technology sector at 24.1%. This is followed by Financial Services and Healthcare at 13.77% and 13.64% respectively. Basic Materials (2.44%), Energy (2.77%), and Real Estate (3.59%) only make up 8.80% of the fund’s total assets.
VTI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.77%, 9.39%, 10.4%, 11.83%, and 13.64%.
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%.
VTI is 6.40% less exposed to the Technology sector than ARKK (24.1% vs 30.5%). VTI’s exposure to Financial Services and Healthcare stocks is 13.73% higher and 15.83% lower respectively (13.77% vs. 0.04% and 13.64% vs. 29.47%). In total, Basic Materials, Energy, and Real Estate also make up 8.29% more of the fund’s holdings compared to ARKK (8.80% vs. 0.51%).
Holdings
| VTI Holdings | Weight |
| Apple Inc | 4.9% |
| Microsoft Corp | 4.6% |
| Amazon.com Inc | 3.33% |
| Facebook Inc Class A | 1.88% |
| Alphabet Inc Class A | 1.66% |
| Alphabet Inc Class C | 1.56% |
| Tesla Inc | 1.18% |
| Berkshire Hathaway Inc Class B | 1.09% |
| NVIDIA Corp | 1.07% |
| JPMorgan Chase & Co | 1.06% |
VTI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 4.9%, 4.6%, 3.33%, 1.88%, and 1.66%.
Alphabet Inc Class C (1.56%), Tesla Inc (1.18%), and Berkshire Hathaway Inc Class B (1.09%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the VTI’s holdings at 1.07% and 1.06%.
| 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%.
Performance
Annual Returns
| Year | VTI | ARKK |
| 2020 | 20.95% | 152.52% |
| 2019 | 30.8% | 35.73% |
| 2018 | -5.13% | 3.58% |
| 2017 | 21.16% | 87.38% |
| 2016 | 12.68% | -1.96% |
| 2015 | 0.4% | 3.76% |
| 2014 | 12.56% | 0.0% |
| 2013 | 33.51% | 0.0% |
| 2012 | 16.41% | 0.0% |
| 2011 | 1.06% | 0.0% |
| 2010 | 17.26% | 0.0% |
VTI had its best year in 2013 with an annual return of 33.51%. VTI’s worst year over the past decade yielded -5.13% and occurred in 2018. In most years the Vanguard Total Stock Market Index Fund ETF Shares provided moderate returns such as in 2016, 2012, and 2010 where annual returns amounted to 12.68%, 16.41%, and 17.26% 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 |
| VTI | $10,000 | $20,490 | 14.70% |
| ARKK | $10,000 | $65,218 | 55.45% |
A $10,000 investment in VTI would have resulted in a final balance of $20,490. This is a profit of $10,490 over 5 years and amounts to a compound annual growth rate (CAGR) of 14.70%.
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%.
VTI’s CAGR is 40.75 percentage points lower than that of ARKK and as a result, would have yielded $44,728 less on a $10,000 investment. Thus, VTI performed worse than ARKK by 40.75% annually.
Current recommendations:
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.
I believe that money is just a means to an end: to be free to spend your time as you wish, to maximize your positive impact on the world.
