ARKK vs. IWS: What’s The Difference?

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

The expense ratio of ARKK is 0.52 percentage points higher than IWS’s (0.75% vs. 0.23%). ARKK also has a higher exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than IWS over the past 5 years.

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

Summary

ARKK IWS
Name ARK Innovation ETF iShares Russell Mid-Cap Value ETF
Category Mid-Cap Growth Mid-Cap Value
Issuer ARK ETF Trust iShares
AUM 25.52B 14.24B
Avg. Return 55.45% 12.35%
Div. Yield 0.0% 1.34%
Expense Ratio 0.75% 0.23%

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 Value ETF (IWS) is a Mid-Cap Value fund that is issued by iShares. It currently has 14.24B total assets under management and has yielded an average annual return of 12.35% over the past 10 years. The fund has a dividend yield of 1.34% with an expense ratio of 0.23%.

ARKK’s dividend yield is 1.34% lower than that of IWS (0.0% vs. 1.34%). Also, ARKK yielded on average 43.10% more per year over the past decade (55.45% vs. 12.35%). The expense ratio of ARKK is 0.52 percentage points higher than IWS’s (0.75% vs. 0.23%).

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Fund Composition

Industry Exposure

ARKK vs. IWS - Industry Exposure

ARKK IWS
Technology 30.5% 11.39%
Industrials 2.11% 14.6%
Energy 0.0% 4.71%
Communication Services 25.01% 4.08%
Utilities 0.0% 6.97%
Healthcare 29.47% 8.56%
Consumer Defensive 0.93% 4.76%
Real Estate 0.51% 11.71%
Financial Services 0.04% 15.75%
Consumer Cyclical 11.42% 12.07%
Basic Materials 0.0% 5.4%

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 Value ETF (IWS) has the most exposure to the Financial Services sector at 15.75%. This is followed by Industrials and Consumer Cyclical at 14.6% and 12.07% respectively. Energy (4.71%), Consumer Defensive (4.76%), and Basic Materials (5.4%) only make up 14.87% of the fund’s total assets.

IWS’s mid-section with moderate exposure is comprised of Utilities, Healthcare, Technology, Real Estate, and Consumer Cyclical stocks at 6.97%, 8.56%, 11.39%, 11.71%, and 12.07%.

ARKK is 19.11% more exposed to the Technology sector than IWS (30.5% vs 11.39%). ARKK’s exposure to Healthcare and Communication Services stocks is 20.91% higher and 20.93% higher respectively (29.47% vs. 8.56% and 25.01% vs. 4.08%). In total, Utilities, Energy, and Financial Services also make up 27.39% less of the fund’s holdings compared to IWS (0.04% vs. 27.43%).

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%.

IWS - Holdings

IWS Holdings Weight
Twitter Inc 0.69%
Marvell Technology Inc 0.69%
IHS Markit Ltd 0.62%
Prudential Financial Inc 0.56%
Otis Worldwide Corp Ordinary Shares 0.54%
International Flavors & Fragrances Inc 0.53%
Xcel Energy Inc 0.52%
Motorola Solutions Inc 0.52%
Aptiv PLC 0.52%
Aflac Inc 0.52%

IWS’s Top Holdings are Twitter Inc, Marvell Technology Inc, IHS Markit Ltd, Prudential Financial Inc, and Otis Worldwide Corp Ordinary Shares at 0.69%, 0.69%, 0.62%, 0.56%, and 0.54%.

International Flavors & Fragrances Inc (0.53%), Xcel Energy Inc (0.52%), and Motorola Solutions Inc (0.52%) have a slightly smaller but still significant weight. Aptiv PLC and Aflac Inc are also represented in the IWS’s holdings at 0.52% and 0.52%.

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Risk Analysis

ARKK IWS
Mean Return 0 1.06
R-squared 0 87.04
Std. Deviation 0 16.03
Alpha 0 -4.11
Beta 0 1.1
Sharpe Ratio 0 0.75
Treynor Ratio 0 10.3

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

The iShares Russell Mid-Cap Value ETF (IWS) has a R-squared of 87.04 with a Alpha of -4.11 and a Beta of 1.1. Its Standard Deviation is 16.03 while IWS’s Mean Return is 1.06. Furthermore, the fund has a Sharpe Ratio of 0.75 and a Treynor Ratio of 10.3.

ARKK’s Mean Return is 1.06 points lower than that of IWS and its R-squared is 87.04 points lower. With a Standard Deviation of 0, ARKK is slightly less volatile than IWS. The Alpha and Beta of ARKK are 4.11 points higher and 1.10 points lower than IWS’s Alpha and Beta.

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Performance

Annual Returns

ARKK vs. IWS - Annual Returns

Year ARKK IWS
2020 152.52% 4.76%
2019 35.73% 26.78%
2018 3.58% -12.36%
2017 87.38% 13.1%
2016 -1.96% 19.69%
2015 3.76% -4.93%
2014 0.0% 14.49%
2013 0.0% 33.11%
2012 0.0% 18.27%
2011 0.0% -1.55%
2010 0.0% 24.46%

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 IWS, returning 33.11% on an annual basis. The poorest year for IWS in the last ten years was 2018, with a yield of -12.36%. Most years the iShares Russell Mid-Cap Value ETF has given investors modest returns, such as in 2017, 2014, and 2012, when gains were 13.1%, 14.49%, and 18.27% respectively.

Portfolio Growth

ARKK vs. IWS - Portfolio Growth

Fund Initial Balance Final Balance CAGR
ARKK $10,000 $65,218 55.45%
IWS $10,000 $15,756 12.35%

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 IWS, the end total would have been $15,756. This equates to a $5,756 profit over 5 years and a compound annual growth rate (CAGR) of 12.35%.

ARKK’s CAGR is 43.10 percentage points higher than that of IWS and as a result, would have yielded $49,462 more on a $10,000 investment. Thus, ARKK outperformed IWS by 43.10% annually.


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