The ARK Innovation ETF (ARKK) and the iShares Russell 2000 Value ETF (IWN) are both among the Top 100 ETFs. ARKK is a ARK ETF Trust Mid-Cap Growth fund and IWN is a iShares Small Value fund. So, what’s the difference between ARKK and IWN? And which fund is better?
The expense ratio of ARKK is 0.51 percentage points higher than IWN’s (0.75% vs. 0.24%). ARKK also has a higher exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than IWN over the past 5 years.
In this article, we’ll compare ARKK vs. IWN. We’ll look at portfolio growth and performance, as well as at their annual returns and fund composition. Moreover, I’ll also discuss ARKK’s and IWN’s holdings, risk metrics, and industry exposure and examine how these affect their overall returns.
Summary
| ARKK | IWN | |
| Name | ARK Innovation ETF | iShares Russell 2000 Value ETF |
| Category | Mid-Cap Growth | Small Value |
| Issuer | ARK ETF Trust | iShares |
| AUM | 25.52B | 15.48B |
| Avg. Return | 55.45% | 10.96% |
| Div. Yield | 0.0% | 1.26% |
| Expense Ratio | 0.75% | 0.24% |
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 Russell 2000 Value ETF (IWN) is a Small Value fund that is issued by iShares. It currently has 15.48B total assets under management and has yielded an average annual return of 10.96% over the past 10 years. The fund has a dividend yield of 1.26% with an expense ratio of 0.24%.
ARKK’s dividend yield is 1.26% lower than that of IWN (0.0% vs. 1.26%). Also, ARKK yielded on average 44.49% more per year over the past decade (55.45% vs. 10.96%). The expense ratio of ARKK is 0.51 percentage points higher than IWN’s (0.75% vs. 0.24%).
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Fund Composition
Industry Exposure
| ARKK | IWN | |
| Technology | 30.5% | 6.02% |
| Industrials | 2.11% | 14.58% |
| Energy | 0.0% | 5.84% |
| Communication Services | 25.01% | 4.17% |
| Utilities | 0.0% | 4.69% |
| Healthcare | 29.47% | 10.94% |
| Consumer Defensive | 0.93% | 3.77% |
| Real Estate | 0.51% | 14.36% |
| Financial Services | 0.04% | 22.97% |
| Consumer Cyclical | 11.42% | 8.39% |
| Basic Materials | 0.0% | 4.29% |
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 Russell 2000 Value ETF (IWN) has the most exposure to the Financial Services sector at 22.97%. This is followed by Industrials and Real Estate at 14.58% and 14.36% respectively. Communication Services (4.17%), Basic Materials (4.29%), and Utilities (4.69%) only make up 13.15% of the fund’s total assets.
IWN’s mid-section with moderate exposure is comprised of Energy, Technology, Consumer Cyclical, Healthcare, and Real Estate stocks at 5.84%, 6.02%, 8.39%, 10.94%, and 14.36%.
ARKK is 24.48% more exposed to the Technology sector than IWN (30.5% vs 6.02%). ARKK’s exposure to Healthcare and Communication Services stocks is 18.53% higher and 20.84% higher respectively (29.47% vs. 10.94% and 25.01% vs. 4.17%). In total, Utilities, Energy, and Financial Services also make up 33.46% less of the fund’s holdings compared to IWN (0.04% vs. 33.50%).
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%.
| IWN Holdings | Weight |
| AMC Entertainment Holdings Inc Class A | 1.06% |
| Tenet Healthcare Corp | 0.47% |
| Stag Industrial Inc | 0.47% |
| Ovintiv Inc | 0.45% |
| EMCOR Group Inc | 0.42% |
| Valley National Bancorp | 0.37% |
| Chesapeake Energy Corp Ordinary Shares – New | 0.37% |
| Agree Realty Corp | 0.36% |
| Macy’s Inc | 0.35% |
| Essent Group Ltd | 0.35% |
IWN’s Top Holdings are AMC Entertainment Holdings Inc Class A, Tenet Healthcare Corp, Stag Industrial Inc, Ovintiv Inc, and EMCOR Group Inc at 1.06%, 0.47%, 0.47%, 0.45%, and 0.42%.
Valley National Bancorp (0.37%), Chesapeake Energy Corp Ordinary Shares – New (0.37%), and Agree Realty Corp (0.36%) have a slightly smaller but still significant weight. Macy’s Inc and Essent Group Ltd are also represented in the IWN’s holdings at 0.35% and 0.35%.
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Risk Analysis
| ARKK | IWN | |
| Mean Return | 0 | 1.01 |
| R-squared | 0 | 72.64 |
| Std. Deviation | 0 | 19.28 |
| Alpha | 0 | -6.32 |
| Beta | 0 | 1.21 |
| Sharpe Ratio | 0 | 0.59 |
| Treynor Ratio | 0 | 8.3 |
The ARK Innovation ETF (ARKK) has a Treynor Ratio of 0 with a Standard Deviation of 0 and a Beta of 0. Its Sharpe Ratio is 0 while ARKK’s Mean Return is 0. Furthermore, the fund has a R-squared of 0 and a Alpha of 0.
The iShares Russell 2000 Value ETF (IWN) has a Mean Return of 1.01 with a R-squared of 72.64 and a Alpha of -6.32. Its Treynor Ratio is 8.3 while IWN’s Standard Deviation is 19.28. Furthermore, the fund has a Beta of 1.21 and a Sharpe Ratio of 0.59.
ARKK’s Mean Return is 1.01 points lower than that of IWN and its R-squared is 72.64 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than IWN. The Alpha and Beta of ARKK are 6.32 points higher and 1.21 points lower than IWN’s Alpha and Beta.
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Performance
Annual Returns
| Year | ARKK | IWN |
| 2020 | 152.52% | 4.5% |
| 2019 | 35.73% | 22.17% |
| 2018 | 3.58% | -12.94% |
| 2017 | 87.38% | 7.73% |
| 2016 | -1.96% | 31.64% |
| 2015 | 3.76% | -7.53% |
| 2014 | 0.0% | 4.13% |
| 2013 | 0.0% | 34.3% |
| 2012 | 0.0% | 17.92% |
| 2011 | 0.0% | -5.64% |
| 2010 | 0.0% | 24.29% |
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 IWN, returning 34.3% on an annual basis. The poorest year for IWN in the last ten years was 2018, with a yield of -12.94%. Most years the iShares Russell 2000 Value ETF has given investors modest returns, such as in 2020, 2017, and 2012, when gains were 4.5%, 7.73%, and 17.92% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| ARKK | $10,000 | $65,218 | 55.45% |
| IWN | $10,000 | $15,762 | 10.96% |
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 IWN, the end total would have been $15,762. This equates to a $5,762 profit over 5 years and a compound annual growth rate (CAGR) of 10.96%.
ARKK’s CAGR is 44.49 percentage points higher than that of IWN and as a result, would have yielded $49,456 more on a $10,000 investment. Thus, ARKK outperformed IWN by 44.49% annually.
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