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ARKK vs. IWP: What’s The Difference?

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

The expense ratio of ARKK is 0.51 percentage points higher than IWP’s (0.75% vs. 0.24%). ARKK also has a lower exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than IWP over the past 5 years.

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

Summary

ARKKIWP
NameARK Innovation ETFiShares Russell Mid-Cap Growth ETF
CategoryMid-Cap GrowthMid-Cap Growth
IssuerARK ETF TrustiShares
AUM25.52B15.7B
Avg. Return55.45%16.75%
Div. Yield0.0%0.26%
Expense Ratio0.75%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 Mid-Cap Growth ETF (IWP) is a Mid-Cap Growth fund that is issued by iShares. It currently has 15.7B total assets under management and has yielded an average annual return of 16.75% over the past 10 years. The fund has a dividend yield of 0.26% with an expense ratio of 0.24%.

ARKK’s dividend yield is 0.26% lower than that of IWP (0.0% vs. 0.26%). Also, ARKK yielded on average 38.70% more per year over the past decade (55.45% vs. 16.75%). The expense ratio of ARKK is 0.51 percentage points higher than IWP’s (0.75% vs. 0.24%).

Fund Composition

Industry Exposure

ARKK vs. IWP - Industry Exposure

ARKKIWP
Technology30.5%33.88%
Industrials2.11%14.09%
Energy0.0%1.51%
Communication Services25.01%6.32%
Utilities0.0%0.16%
Healthcare29.47%16.79%
Consumer Defensive0.93%2.32%
Real Estate0.51%2.46%
Financial Services0.04%4.52%
Consumer Cyclical11.42%16.09%
Basic Materials0.0%1.86%

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 Mid-Cap Growth ETF (IWP) has the most exposure to the Technology sector at 33.88%. This is followed by Healthcare and Consumer Cyclical at 16.79% and 16.09% respectively. Energy (1.51%), Basic Materials (1.86%), and Consumer Defensive (2.32%) only make up 5.69% of the fund’s total assets.

IWP’s mid-section with moderate exposure is comprised of Real Estate, Financial Services, Communication Services, Industrials, and Consumer Cyclical stocks at 2.46%, 4.52%, 6.32%, 14.09%, and 16.09%.

ARKK is 3.38% less exposed to the Technology sector than IWP (30.5% vs 33.88%). ARKK’s exposure to Healthcare and Communication Services stocks is 12.68% higher and 18.69% higher respectively (29.47% vs. 16.79% and 25.01% vs. 6.32%). In total, Utilities, Energy, and Financial Services also make up 6.15% less of the fund’s holdings compared to IWP (0.04% vs. 6.19%).

Holdings

ARKK - Holdings

ARKK HoldingsWeight
Tesla Inc9.56%
Roku Inc Class A6.48%
Teladoc Health Inc5.76%
Square Inc A4.37%
Zoom Video Communications Inc4.36%
Shopify Inc A4.27%
Spotify Technology SA3.68%
Twilio Inc A3.66%
Coinbase Global Inc Ordinary Shares – Class A3.65%
Unity Software Inc Ordinary Shares3.41%

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%.

IWP - Holdings

IWP HoldingsWeight
IDEXX Laboratories Inc1.3%
DocuSign Inc1.3%
Roku Inc Class A1.29%
Match Group Inc1.06%
Chipotle Mexican Grill Inc1.06%
Pinterest Inc1.05%
Veeva Systems Inc Class A1.04%
Palantir Technologies Inc Ordinary Shares – Class A1.04%
Lululemon Athletica Inc1.01%
DexCom Inc1.0%

IWP’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Roku Inc Class A, Match Group Inc, and Chipotle Mexican Grill Inc at 1.3%, 1.3%, 1.29%, 1.06%, and 1.06%.

Pinterest Inc (1.05%), Veeva Systems Inc Class A (1.04%), and Palantir Technologies Inc Ordinary Shares – Class A (1.04%) have a slightly smaller but still significant weight. Lululemon Athletica Inc and DexCom Inc are also represented in the IWP’s holdings at 1.01% and 1.0%.

Risk Analysis

ARKKIWP
Mean Return01.27
R-squared087.01
Std. Deviation016.05
Alpha0-1.03
Beta01.1
Sharpe Ratio00.91
Treynor Ratio012.98

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

The iShares Russell Mid-Cap Growth ETF (IWP) has a Beta of 1.1 with a Standard Deviation of 16.05 and a Treynor Ratio of 12.98. Its R-squared is 87.01 while IWP’s Sharpe Ratio is 0.91. Furthermore, the fund has a Mean Return of 1.27 and a Alpha of -1.03.

ARKK’s Mean Return is 1.27 points lower than that of IWP and its R-squared is 87.01 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than IWP. The Alpha and Beta of ARKK are 1.03 points higher and 1.10 points lower than IWP’s Alpha and Beta.

Performance

Annual Returns

ARKK vs. IWP - Annual Returns

YearARKKIWP
2020152.52%35.29%
201935.73%35.14%
20183.58%-4.95%
201787.38%24.98%
2016-1.96%7.15%
20153.76%-0.39%
20140.0%11.68%
20130.0%35.44%
20120.0%15.62%
20110.0%-1.82%
20100.0%26.1%

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 IWP, returning 35.44% on an annual basis. The poorest year for IWP in the last ten years was 2018, with a yield of -4.95%. Most years the iShares Russell Mid-Cap Growth ETF has given investors modest returns, such as in 2014, 2012, and 2017, when gains were 11.68%, 15.62%, and 24.98% respectively.

Portfolio Growth

ARKK vs. IWP - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
ARKK$10,000$65,21855.45%
IWP$10,000$23,27216.75%

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 IWP, the end total would have been $23,272. This equates to a $13,272 profit over 5 years and a compound annual growth rate (CAGR) of 16.75%.

ARKK’s CAGR is 38.70 percentage points higher than that of IWP and as a result, would have yielded $41,946 more on a $10,000 investment. Thus, ARKK outperformed IWP by 38.70% annually.


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