VTV vs. ARKK: What’s The Difference?

The Vanguard Value Index Fund ETF Shares (VTV) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. VTV is a Vanguard Large Value fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between VTV and ARKK? And which fund is better?

The expense ratio of VTV is 0.71 percentage points lower than ARKK’s (0.04% vs. 0.75%). VTV also has a higher exposure to the financial services sector and a higher standard deviation. Overall, VTV has provided lower returns than ARKK over the past ten years.

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

Summary

VTV ARKK
Name Vanguard Value Index Fund ETF Shares ARK Innovation ETF
Category Large Value Mid-Cap Growth
Issuer Vanguard ARK ETF Trust
AUM 125.77B 25.52B
Avg. Return 12.07% 55.45%
Div. Yield 2.15% 0.0%
Expense Ratio 0.04% 0.75%

The Vanguard Value Index Fund ETF Shares (VTV) is a Large Value fund that is issued by Vanguard. It currently has 125.77B total assets under management and has yielded an average annual return of 12.07% over the past 10 years. The fund has a dividend yield of 2.15% 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%.

VTV’s dividend yield is 2.15% higher than that of ARKK (2.15% vs. 0.0%). Also, VTV yielded on average 43.38% less per year over the past decade (12.07% vs. 55.45%). The expense ratio of VTV is 0.71 percentage points lower than ARKK’s (0.04% vs. 0.75%).

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Fund Composition

Industry Exposure

VTV vs. ARKK - Industry Exposure

VTV ARKK
Technology 7.86% 30.5%
Industrials 12.61% 2.11%
Energy 5.59% 0.0%
Communication Services 5.49% 25.01%
Utilities 5.37% 0.0%
Healthcare 19.84% 29.47%
Consumer Defensive 10.72% 0.93%
Real Estate 3.01% 0.51%
Financial Services 22.81% 0.04%
Consumer Cyclical 3.79% 11.42%
Basic Materials 2.91% 0.0%

The Vanguard Value Index Fund ETF Shares (VTV) has the most exposure to the Financial Services sector at 22.81%. This is followed by Healthcare and Industrials at 19.84% and 12.61% respectively. Real Estate (3.01%), Consumer Cyclical (3.79%), and Utilities (5.37%) only make up 12.17% of the fund’s total assets.

VTV’s mid-section with moderate exposure is comprised of Communication Services, Energy, Technology, Consumer Defensive, and Industrials stocks at 5.49%, 5.59%, 7.86%, 10.72%, and 12.61%.

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%.

VTV is 22.77% more exposed to the Financial Services sector than ARKK (22.81% vs 0.04%). VTV’s exposure to Healthcare and Industrials stocks is 9.63% lower and 10.50% higher respectively (19.84% vs. 29.47% and 12.61% vs. 2.11%). In total, Real Estate, Consumer Cyclical, and Utilities also make up 0.24% more of the fund’s holdings compared to ARKK (12.17% vs. 11.93%).

Holdings

VTV - Holdings

VTV Holdings Weight
Berkshire Hathaway Inc Class B 2.98%
JPMorgan Chase & Co 2.82%
Johnson & Johnson 2.6%
UnitedHealth Group Inc 2.27%
Procter & Gamble Co 1.98%
Bank of America Corp 1.91%
Exxon Mobil Corp 1.6%
Comcast Corp Class A 1.57%
Intel Corp 1.36%
Verizon Communications Inc 1.32%

VTV’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.98%, 2.82%, 2.6%, 2.27%, and 1.98%.

Bank of America Corp (1.91%), Exxon Mobil Corp (1.6%), and Comcast Corp Class A (1.57%) have a slightly smaller but still significant weight. Intel Corp and Verizon Communications Inc are also represented in the VTV’s holdings at 1.36% and 1.32%.

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

VTV ARKK
Mean Return 1.05 0
R-squared 92.61 0
Std. Deviation 13.78 0
Alpha -1.92 0
Beta 0.98 0
Sharpe Ratio 0.87 0
Treynor Ratio 11.94 0

The Vanguard Value Index Fund ETF Shares (VTV) has a Beta of 0.98 with a Alpha of -1.92 and a R-squared of 92.61. Its Sharpe Ratio is 0.87 while VTV’s Mean Return is 1.05. Furthermore, the fund has a Standard Deviation of 13.78 and a Treynor Ratio of 11.94.

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

VTV’s Mean Return is 1.05 points higher than that of ARKK and its R-squared is 92.61 points higher. With a Standard Deviation of 13.78, VTV is slightly more volatile than ARKK. The Alpha and Beta of VTV are 1.92 points lower and 0.98 points higher than ARKK’s Alpha and Beta.

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Performance

Annual Returns

VTV vs. ARKK - Annual Returns

Year VTV ARKK
2020 2.23% 152.52%
2019 25.85% 35.73%
2018 -5.39% 3.58%
2017 17.12% 87.38%
2016 16.88% -1.96%
2015 -0.89% 3.76%
2014 13.19% 0.0%
2013 33.03% 0.0%
2012 15.19% 0.0%
2011 1.16% 0.0%
2010 14.45% 0.0%

VTV had its best year in 2013 with an annual return of 33.03%. VTV’s worst year over the past decade yielded -5.39% and occurred in 2018. In most years the Vanguard Value Index Fund ETF Shares provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.19%, 14.45%, and 15.19% 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

VTV vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
VTV $10,000 $16,662 12.07%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in VTV would have resulted in a final balance of $16,662. This is a profit of $6,662 over 5 years and amounts to a compound annual growth rate (CAGR) of 12.07%.

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%.

VTV’s CAGR is 43.38 percentage points lower than that of ARKK and as a result, would have yielded $48,556 less on a $10,000 investment. Thus, VTV performed worse than ARKK by 43.38% annually.


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