The ARK Innovation ETF (ARKK) and the iShares MSCI ACWI ETF (ACWI) are both among the Top 100 ETFs. ARKK is a ARK ETF Trust Mid-Cap Growth fund and ACWI is a iShares N/A fund. So, what’s the difference between ARKK and ACWI? And which fund is better?
The expense ratio of ARKK is 0.43 percentage points higher than ACWI’s (0.75% vs. 0.32%). ARKK also has a higher exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than ACWI over the past 5 years.
In this article, we’ll compare ARKK vs. ACWI. We’ll look at industry exposure and portfolio growth, as well as at their risk metrics and annual returns. Moreover, I’ll also discuss ARKK’s and ACWI’s performance, holdings, and fund composition and examine how these affect their overall returns.
Summary
| ARKK | ACWI | |
| Name | ARK Innovation ETF | iShares MSCI ACWI ETF |
| Category | Mid-Cap Growth | N/A |
| Issuer | ARK ETF Trust | iShares |
| AUM | 25.52B | 16.85B |
| Avg. Return | 55.45% | 10.21% |
| Div. Yield | 0.0% | 1.39% |
| Expense Ratio | 0.75% | 0.32% |
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%.
The iShares MSCI ACWI ETF (ACWI) is a N/A fund that is issued by iShares. It currently has 16.85B total assets under management and has yielded an average annual return of 10.21% over the past 10 years. The fund has a dividend yield of 1.39% with an expense ratio of 0.32%.
ARKK’s dividend yield is 1.39% lower than that of ACWI (0.0% vs. 1.39%). Also, ARKK yielded on average 45.24% more per year over the past decade (55.45% vs. 10.21%). The expense ratio of ARKK is 0.43 percentage points higher than ACWI’s (0.75% vs. 0.32%).
Fund Composition
Industry Exposure
| ARKK | ACWI | |
| Technology | 30.5% | 20.41% |
| Industrials | 2.11% | 9.65% |
| Energy | 0.0% | 3.48% |
| Communication Services | 25.01% | 9.87% |
| Utilities | 0.0% | 2.61% |
| Healthcare | 29.47% | 11.74% |
| Consumer Defensive | 0.93% | 7.15% |
| Real Estate | 0.51% | 2.75% |
| Financial Services | 0.04% | 15.58% |
| Consumer Cyclical | 11.42% | 12.01% |
| Basic Materials | 0.0% | 4.73% |
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%.
The iShares MSCI ACWI ETF (ACWI) has the most exposure to the Technology sector at 20.41%. This is followed by Financial Services and Consumer Cyclical at 15.58% and 12.01% respectively. Real Estate (2.75%), Energy (3.48%), and Basic Materials (4.73%) only make up 10.96% of the fund’s total assets.
ACWI’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Healthcare, and Consumer Cyclical stocks at 7.15%, 9.65%, 9.87%, 11.74%, and 12.01%.
ARKK is 10.09% more exposed to the Technology sector than ACWI (30.5% vs 20.41%). ARKK’s exposure to Healthcare and Communication Services stocks is 17.73% higher and 15.14% higher respectively (29.47% vs. 11.74% and 25.01% vs. 9.87%). In total, Utilities, Energy, and Financial Services also make up 21.63% less of the fund’s holdings compared to ACWI (0.04% vs. 21.67%).
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%.
| ACWI Holdings | Weight |
| Apple Inc | 3.44% |
| Microsoft Corp | 2.91% |
| Amazon.com Inc | 2.21% |
| Facebook Inc A | 1.25% |
| Alphabet Inc Class C | 1.12% |
| Alphabet Inc A | 1.09% |
| Taiwan Semiconductor Manufacturing Co Ltd | 0.79% |
| Tesla Inc | 0.78% |
| NVIDIA Corp | 0.74% |
| JPMorgan Chase & Co | 0.71% |
ACWI’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc A, and Alphabet Inc Class C at 3.44%, 2.91%, 2.21%, 1.25%, and 1.12%.
Alphabet Inc A (1.09%), Taiwan Semiconductor Manufacturing Co Ltd (0.79%), and Tesla Inc (0.78%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ACWI’s holdings at 0.74% and 0.71%.
Risk Analysis
| ARKK | ACWI | |
| Mean Return | 0 | 0.89 |
| R-squared | 0 | 99.96 |
| Std. Deviation | 0 | 14.05 |
| Alpha | 0 | 0.15 |
| Beta | 0 | 1 |
| Sharpe Ratio | 0 | 0.71 |
| Treynor Ratio | 0 | 9.45 |
The ARK Innovation ETF (ARKK) has a Beta of 0 with a R-squared of 0 and a Treynor Ratio of 0. Its Alpha is 0 while ARKK’s Sharpe Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Mean Return of 0.
The iShares MSCI ACWI ETF (ACWI) has a Mean Return of 0.89 with a Beta of 1 and a Sharpe Ratio of 0.71. Its Treynor Ratio is 9.45 while ACWI’s R-squared is 99.96. Furthermore, the fund has a Alpha of 0.15 and a Standard Deviation of 14.05.
ARKK’s Mean Return is 0.89 points lower than that of ACWI and its R-squared is 99.96 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than ACWI. The Alpha and Beta of ARKK are 0.15 points lower and 1.00 points lower than ACWI’s Alpha and Beta.
Performance
Annual Returns
| Year | ARKK | ACWI |
| 2020 | 152.52% | 16.38% |
| 2019 | 35.73% | 26.7% |
| 2018 | 3.58% | -9.15% |
| 2017 | 87.38% | 24.35% |
| 2016 | -1.96% | 8.22% |
| 2015 | 3.76% | -2.39% |
| 2014 | 0.0% | 4.64% |
| 2013 | 0.0% | 22.91% |
| 2012 | 0.0% | 15.99% |
| 2011 | 0.0% | -7.6% |
| 2010 | 0.0% | 12.31% |
ARKK had its best year in 2020 with an annual return of 152.52%. ARKK’s worst year over the past decade yielded -1.96% and occurred in 2016. In most years the ARK Innovation ETF provided moderate returns such as in 2011, 2010, and 2018 where annual returns amounted to 0.0%, 0.0%, and 3.58% respectively.
The year 2019 was the strongest year for ACWI, returning 26.7% on an annual basis. The poorest year for ACWI in the last ten years was 2018, with a yield of -9.15%. Most years the iShares MSCI ACWI ETF has given investors modest returns, such as in 2016, 2010, and 2012, when gains were 8.22%, 12.31%, and 15.99% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ARKK | $10,000 | $65,218 | 55.45% |
| ACWI | $10,000 | $18,027 | 10.21% |
A $10,000 investment in ARKK would have resulted in a final balance of $65,218. This is a profit of $55,218 over 5 years and amounts to a compound annual growth rate (CAGR) of 55.45%.
With a $10,000 investment in ACWI, the end total would have been $18,027. This equates to a $8,027 profit over 5 years and a compound annual growth rate (CAGR) of 10.21%.
ARKK’s CAGR is 45.24 percentage points higher than that of ACWI and as a result, would have yielded $47,191 more on a $10,000 investment. Thus, ARKK outperformed ACWI by 45.24% annually.
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