Portfoliovisulizer- VTI vs ARKW ?

[Dancin'Dog]

VTI is still down 2% YTD and I started looking for better options.  Of course I scanned through and compared the other Vanguard offerings and some of them a little better than VTI over the past number of years.  So, I began looking for other ETFs that have performed well and I discovered ARK funds.  ARKW only began around Oct 2014, but in that timeframe has done much better than VTI and also quite a bit better than VGT (Vanguard's tech ETF).


It's an actively managed fund, the an ER 0.76%.  But it's performance seems to cover the fees quite well.  Here's the numbers from Portfoliovisulizer comparing them.


From Oct 2014-Present beginning with $10,000


VTI = $16,413
VGT = $28,564
ARKW = $48,800


I'm not trying to sell anyone on these, but it's a huge difference.  After running dozens of different funds through Portfoliovisulizer I can't understand the reasoning that anyone would choose to be 100% in VTI / VTSAX.  Yet, that is  common advice around here. 


In the same timeframe above VTI's worst year was -5.21% while neither VGT or ARKW even had a negative year.  The idea of the "total market" fund being safer because it's diversified by holding over 3500 companies, didn't seem to be an advantage that year.  Index funds being cap weighted means that most of the funds are invested in the top 10 companies, and being an index also means that it's stuck with portfolio & weighting that it has, regardless of the outcome.  It also means a lot of real winners don't get to shine, because they aren't big enough to make the "top 10" list. 


Why's VTI /VTSAX so popular?

[helloyou]

This year is very specific. There is an enormous speculation on technology stock. I'm seeing an enormous price growth recently to impossible level in FANG stocks.

Its used as wealth preservation instead of investment and bought the same way they ae buying gold.

My guess is that trend will normalise as the virus gets contained....

[vand]

When we talk about the average investor having below-market returns because they have sub-optimal behaviour this is exactly what we mean. Chasing returns and panic selling - acting according to fear and, more pertinently in this case, greed.

Tech has been undoubtedly white hot in the last several years, but that also makes it a very frothy and crowded trade. Maybe there is more juice to be squeezed, but history shows that chasing hot sectors is a dubious investment strategy.

[Boll weevil]

What are your goals and timelines for the money, and what is your risk tolerance?

A lot of the advice posted here is for long term investors looking to set up something that will last for the rest of their life, so diversification is helpful in smoothing out the peaks and valleys. Another thing is that index funds have been in existence for decades now, so they’ve got a track record.

ARKW has been around since 2014... it didn’t go through the recession of 2007-2008, so I wouldn’t consider it to have been stress tested.

That being said, I do own some ARKK, but it makes up a small fraction of my overall portfolio. But even here I gave up some performance for diversification. ARK has a few ETFs that focus on various sectors, ARKW being one of them (the others being ARKQ, ARKG, and ARKF). I  decided that I don’t know which of those sectors will do the best over the long haul, so I went with ARKK, which has some of each sector. Sure I won’t do as well as if I had picked the best of the four, but I should do better than if I had picked the worst.

[RWD]

Past performance does not indicate future returns