The ARK Innovation ETF (ARKK) and the iShares MSCI EAFE Value ETF (EFV) are both among the Top 100 ETFs. ARKK is a ARK ETF Trust Mid-Cap Growth fund and EFV is a iShares Foreign Large Value fund. So, what’s the difference between ARKK and EFV? And which fund is better?
The expense ratio of ARKK is 0.36 percentage points higher than EFV’s (0.75% vs. 0.39%). ARKK also has a higher exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than EFV over the past 5 years.
In this article, we’ll compare ARKK vs. EFV. We’ll look at performance and fund composition, as well as at their annual returns and portfolio growth. Moreover, I’ll also discuss ARKK’s and EFV’s holdings, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| ARKK | EFV | |
| Name | ARK Innovation ETF | iShares MSCI EAFE Value ETF |
| Category | Mid-Cap Growth | Foreign Large Value |
| Issuer | ARK ETF Trust | iShares |
| AUM | 25.52B | 14.37B |
| Avg. Return | 55.45% | 3.99% |
| Div. Yield | 0.0% | 2.94% |
| Expense Ratio | 0.75% | 0.39% |
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 EAFE Value ETF (EFV) is a Foreign Large Value fund that is issued by iShares. It currently has 14.37B total assets under management and has yielded an average annual return of 3.99% over the past 10 years. The fund has a dividend yield of 2.94% with an expense ratio of 0.39%.
ARKK’s dividend yield is 2.94% lower than that of EFV (0.0% vs. 2.94%). Also, ARKK yielded on average 51.46% more per year over the past decade (55.45% vs. 3.99%). The expense ratio of ARKK is 0.36 percentage points higher than EFV’s (0.75% vs. 0.39%).
Fund Composition
Industry Exposure
| ARKK | EFV | |
| Technology | 30.5% | 2.98% |
| Industrials | 2.11% | 11.6% |
| Energy | 0.0% | 6.6% |
| Communication Services | 25.01% | 6.46% |
| Utilities | 0.0% | 6.14% |
| Healthcare | 29.47% | 9.19% |
| Consumer Defensive | 0.93% | 6.82% |
| Real Estate | 0.51% | 5.06% |
| Financial Services | 0.04% | 26.55% |
| Consumer Cyclical | 11.42% | 9.0% |
| Basic Materials | 0.0% | 9.59% |
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 EAFE Value ETF (EFV) has the most exposure to the Financial Services sector at 26.55%. This is followed by Industrials and Basic Materials at 11.6% and 9.59% respectively. Real Estate (5.06%), Utilities (6.14%), and Communication Services (6.46%) only make up 17.66% of the fund’s total assets.
EFV’s mid-section with moderate exposure is comprised of Energy, Consumer Defensive, Consumer Cyclical, Healthcare, and Basic Materials stocks at 6.6%, 6.82%, 9.0%, 9.19%, and 9.59%.
ARKK is 27.52% more exposed to the Technology sector than EFV (30.5% vs 2.98%). ARKK’s exposure to Healthcare and Communication Services stocks is 20.28% higher and 18.55% higher respectively (29.47% vs. 9.19% and 25.01% vs. 6.46%). In total, Utilities, Energy, and Financial Services also make up 39.25% less of the fund’s holdings compared to EFV (0.04% vs. 39.29%).
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%.
| EFV Holdings | Weight |
| Novartis AG | 2.41% |
| Toyota Motor Corp | 2.21% |
| Commonwealth Bank of Australia | 1.59% |
| Siemens AG | 1.45% |
| Sanofi SA | 1.42% |
| HSBC Holdings PLC | 1.4% |
| TotalEnergies SE | 1.35% |
| Allianz SE | 1.23% |
| GlaxoSmithKline PLC | 1.18% |
| Rio Tinto PLC | 1.1% |
EFV’s Top Holdings are Novartis AG, Toyota Motor Corp, Commonwealth Bank of Australia, Siemens AG, and Sanofi SA at 2.41%, 2.21%, 1.59%, 1.45%, and 1.42%.
HSBC Holdings PLC (1.4%), TotalEnergies SE (1.35%), and Allianz SE (1.23%) have a slightly smaller but still significant weight. GlaxoSmithKline PLC and Rio Tinto PLC are also represented in the EFV’s holdings at 1.18% and 1.1%.
Risk Analysis
| ARKK | EFV | |
| Mean Return | 0 | 0.42 |
| R-squared | 0 | 92.15 |
| Std. Deviation | 0 | 16.53 |
| Alpha | 0 | -1.77 |
| Beta | 0 | 1.05 |
| Sharpe Ratio | 0 | 0.26 |
| Treynor Ratio | 0 | 2.92 |
The ARK Innovation ETF (ARKK) has a Beta of 0 with a Treynor Ratio of 0 and a R-squared of 0. Its Alpha is 0 while ARKK’s Mean Return is 0. Furthermore, the fund has a Standard Deviation of 0 and a Sharpe Ratio of 0.
The iShares MSCI EAFE Value ETF (EFV) has a Beta of 1.05 with a R-squared of 92.15 and a Treynor Ratio of 2.92. Its Sharpe Ratio is 0.26 while EFV’s Standard Deviation is 16.53. Furthermore, the fund has a Alpha of -1.77 and a Mean Return of 0.42.
ARKK’s Mean Return is 0.42 points lower than that of EFV and its R-squared is 92.15 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than EFV. The Alpha and Beta of ARKK are 1.77 points higher and 1.05 points lower than EFV’s Alpha and Beta.
Performance
Annual Returns
| Year | ARKK | EFV |
| 2020 | 152.52% | -2.78% |
| 2019 | 35.73% | 15.97% |
| 2018 | 3.58% | -14.88% |
| 2017 | 87.38% | 21.22% |
| 2016 | -1.96% | 4.87% |
| 2015 | 3.76% | -5.89% |
| 2014 | 0.0% | -5.65% |
| 2013 | 0.0% | 22.61% |
| 2012 | 0.0% | 17.52% |
| 2011 | 0.0% | -12.24% |
| 2010 | 0.0% | 3.18% |
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 2013 was the strongest year for EFV, returning 22.61% on an annual basis. The poorest year for EFV in the last ten years was 2018, with a yield of -14.88%. Most years the iShares MSCI EAFE Value ETF has given investors modest returns, such as in 2020, 2010, and 2016, when gains were -2.78%, 3.18%, and 4.87% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ARKK | $10,000 | $65,218 | 55.45% |
| EFV | $10,000 | $12,199 | 3.99% |
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 EFV, the end total would have been $12,199. This equates to a $2,199 profit over 5 years and a compound annual growth rate (CAGR) of 3.99%.
ARKK’s CAGR is 51.46 percentage points higher than that of EFV and as a result, would have yielded $53,019 more on a $10,000 investment. Thus, ARKK outperformed EFV by 51.46% annually.
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