ARKK vs. DGRO: What’s The Difference?

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

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

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

Summary

ARKK DGRO
Name ARK Innovation ETF iShares Core Dividend Growth ETF
Category Mid-Cap Growth Large Value
Issuer ARK ETF Trust iShares
AUM 25.52B 20B
Avg. Return 55.45% 12.46%
Div. Yield 0.0% 2.04%
Expense Ratio 0.75% 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%.

The iShares Core Dividend Growth ETF (DGRO) is a Large Value fund that is issued by iShares. It currently has 20B total assets under management and has yielded an average annual return of 12.46% over the past 10 years. The fund has a dividend yield of 2.04% with an expense ratio of 0.08%.

ARKK’s dividend yield is 2.04% lower than that of DGRO (0.0% vs. 2.04%). Also, ARKK yielded on average 42.99% more per year over the past decade (55.45% vs. 12.46%). The expense ratio of ARKK is 0.67 percentage points higher than DGRO’s (0.75% vs. 0.08%).

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Fund Composition

Industry Exposure

ARKK vs. DGRO - Industry Exposure

ARKK DGRO
Technology 30.5% 18.98%
Industrials 2.11% 12.52%
Energy 0.0% 0.11%
Communication Services 25.01% 4.53%
Utilities 0.0% 7.34%
Healthcare 29.47% 17.55%
Consumer Defensive 0.93% 10.24%
Real Estate 0.51% 0.0%
Financial Services 0.04% 18.47%
Consumer Cyclical 11.42% 7.42%
Basic Materials 0.0% 2.83%

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 Core Dividend Growth ETF (DGRO) has the most exposure to the Technology sector at 18.98%. This is followed by Financial Services and Healthcare at 18.47% and 17.55% respectively. Energy (0.11%), Basic Materials (2.83%), and Communication Services (4.53%) only make up 7.47% of the fund’s total assets.

DGRO’s mid-section with moderate exposure is comprised of Utilities, Consumer Cyclical, Consumer Defensive, Industrials, and Healthcare stocks at 7.34%, 7.42%, 10.24%, 12.52%, and 17.55%.

ARKK is 11.52% more exposed to the Technology sector than DGRO (30.5% vs 18.98%). ARKK’s exposure to Healthcare and Communication Services stocks is 11.92% higher and 20.48% higher respectively (29.47% vs. 17.55% and 25.01% vs. 4.53%). In total, Utilities, Energy, and Financial Services also make up 25.88% less of the fund’s holdings compared to DGRO (0.04% vs. 25.92%).

Holdings

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%.

DGRO - Holdings

DGRO Holdings Weight
Microsoft Corp 3.29%
Apple Inc 3.26%
Pfizer Inc 2.89%
Johnson & Johnson 2.87%
Procter & Gamble Co 2.79%
Verizon Communications Inc 2.68%
JPMorgan Chase & Co 2.57%
The Home Depot Inc 2.35%
Merck & Co Inc 2.11%
Cisco Systems Inc 1.98%

DGRO’s Top Holdings are Microsoft Corp, Apple Inc, Pfizer Inc, Johnson & Johnson, and Procter & Gamble Co at 3.29%, 3.26%, 2.89%, 2.87%, and 2.79%.

Verizon Communications Inc (2.68%), JPMorgan Chase & Co (2.57%), and The Home Depot Inc (2.35%) have a slightly smaller but still significant weight. Merck & Co Inc and Cisco Systems Inc are also represented in the DGRO’s holdings at 2.11% and 1.98%.

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Risk Analysis

ARKK DGRO
Mean Return 0 0
R-squared 0 0
Std. Deviation 0 0
Alpha 0 0
Beta 0 0
Sharpe Ratio 0 0
Treynor Ratio 0 0

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

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

ARKK’s Mean Return is 0.00 points lower than that of DGRO and its R-squared is 0.00 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than DGRO. The Alpha and Beta of ARKK are 0.00 points lower and 0.00 points lower than DGRO’s Alpha and Beta.

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Performance

Annual Returns

ARKK vs. DGRO - Annual Returns

Year ARKK DGRO
2020 152.52% 9.47%
2019 35.73% 30.02%
2018 3.58% -2.24%
2017 87.38% 22.84%
2016 -1.96% 15.27%
2015 3.76% -0.62%
2014 0.0% 0.0%
2013 0.0% 0.0%
2012 0.0% 0.0%
2011 0.0% 0.0%
2010 0.0% 0.0%

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 DGRO, returning 30.02% on an annual basis. The poorest year for DGRO in the last ten years was 2018, with a yield of -2.24%. Most years the iShares Core Dividend Growth ETF has given investors modest returns, such as in 2012, 2011, and 2010, when gains were 0.0%, 0.0%, and 0.0% respectively.

Portfolio Growth

ARKK vs. DGRO - Portfolio Growth

Fund Initial Balance Final Balance CAGR
ARKK $10,000 $65,218 55.45%
DGRO $10,000 $19,702 12.46%

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 DGRO, the end total would have been $19,702. This equates to a $9,702 profit over 5 years and a compound annual growth rate (CAGR) of 12.46%.

ARKK’s CAGR is 42.99 percentage points higher than that of DGRO and as a result, would have yielded $45,516 more on a $10,000 investment. Thus, ARKK outperformed DGRO by 42.99% annually.


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