ARKK vs. MTUM: What’s The Difference?

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

The expense ratio of ARKK is 0.60 percentage points higher than MTUM’s (0.75% vs. 0.15%). ARKK also has a higher exposure to the technology sector and a lower standard deviation. Overall, ARKK has provided higher returns than MTUM over the past 5 years.

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

Summary

ARKK MTUM
Name ARK Innovation ETF iShares MSCI USA Momentum Factor ETF
Category Mid-Cap Growth Large Growth
Issuer ARK ETF Trust iShares
AUM 25.52B 14.53B
Avg. Return 55.45% 17.37%
Div. Yield 0.0% 0.44%
Expense Ratio 0.75% 0.15%

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 USA Momentum Factor ETF (MTUM) is a Large Growth fund that is issued by iShares. It currently has 14.53B total assets under management and has yielded an average annual return of 17.37% over the past 10 years. The fund has a dividend yield of 0.44% with an expense ratio of 0.15%.

ARKK’s dividend yield is 0.44% lower than that of MTUM (0.0% vs. 0.44%). Also, ARKK yielded on average 38.08% more per year over the past decade (55.45% vs. 17.37%). The expense ratio of ARKK is 0.60 percentage points higher than MTUM’s (0.75% vs. 0.15%).

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Fund Composition

Industry Exposure

ARKK vs. MTUM - Industry Exposure

ARKK MTUM
Technology 30.5% 15.24%
Industrials 2.11% 12.47%
Energy 0.0% 1.77%
Communication Services 25.01% 13.18%
Utilities 0.0% 0.19%
Healthcare 29.47% 6.41%
Consumer Defensive 0.93% 2.88%
Real Estate 0.51% 0.43%
Financial Services 0.04% 34.32%
Consumer Cyclical 11.42% 9.96%
Basic Materials 0.0% 3.15%

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 USA Momentum Factor ETF (MTUM) has the most exposure to the Financial Services sector at 34.32%. This is followed by Technology and Communication Services at 15.24% and 13.18% respectively. Real Estate (0.43%), Energy (1.77%), and Consumer Defensive (2.88%) only make up 5.08% of the fund’s total assets.

MTUM’s mid-section with moderate exposure is comprised of Basic Materials, Healthcare, Consumer Cyclical, Industrials, and Communication Services stocks at 3.15%, 6.41%, 9.96%, 12.47%, and 13.18%.

ARKK is 15.26% more exposed to the Technology sector than MTUM (30.5% vs 15.24%). ARKK’s exposure to Healthcare and Communication Services stocks is 23.06% higher and 11.83% higher respectively (29.47% vs. 6.41% and 25.01% vs. 13.18%). In total, Utilities, Energy, and Financial Services also make up 36.24% less of the fund’s holdings compared to MTUM (0.04% vs. 36.28%).

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%.

MTUM - Holdings

MTUM Holdings Weight
Tesla Inc 5.63%
The Walt Disney Co 4.39%
JPMorgan Chase & Co 4.35%
Berkshire Hathaway Inc Class B 4.34%
Bank of America Corp 3.81%
PayPal Holdings Inc 3.76%
Wells Fargo & Co 3.05%
Applied Materials Inc 3.05%
Moderna Inc 2.89%
Alphabet Inc Class C 2.84%

MTUM’s Top Holdings are Tesla Inc, The Walt Disney Co, JPMorgan Chase & Co, Berkshire Hathaway Inc Class B, and Bank of America Corp at 5.63%, 4.39%, 4.35%, 4.34%, and 3.81%.

PayPal Holdings Inc (3.76%), Wells Fargo & Co (3.05%), and Applied Materials Inc (3.05%) have a slightly smaller but still significant weight. Moderna Inc and Alphabet Inc Class C are also represented in the MTUM’s holdings at 2.89% and 2.84%.

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Risk Analysis

ARKK MTUM
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 Alpha of 0 and a Beta of 0. Its Mean Return is 0 while ARKK’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a R-squared of 0.

The iShares MSCI USA Momentum Factor ETF (MTUM) has a Alpha of 0 with a Sharpe Ratio of 0 and a Beta of 0. Its Standard Deviation is 0 while MTUM’s R-squared is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Mean Return of 0.

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

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Performance

Annual Returns

ARKK vs. MTUM - Annual Returns

Year ARKK MTUM
2020 152.52% 29.69%
2019 35.73% 27.57%
2018 3.58% -1.77%
2017 87.38% 37.6%
2016 -1.96% 4.89%
2015 3.76% 9.12%
2014 0.0% 14.48%
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 2017 was the strongest year for MTUM, returning 37.6% on an annual basis. The poorest year for MTUM in the last ten years was 2018, with a yield of -1.77%. Most years the iShares MSCI USA Momentum Factor ETF has given investors modest returns, such as in 2010, 2016, and 2015, when gains were 0.0%, 4.89%, and 9.12% respectively.

Portfolio Growth

ARKK vs. MTUM - Portfolio Growth

Fund Initial Balance Final Balance CAGR
ARKK $10,000 $65,218 55.45%
MTUM $10,000 $23,455 17.37%

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 MTUM, the end total would have been $23,455. This equates to a $13,455 profit over 5 years and a compound annual growth rate (CAGR) of 17.37%.

ARKK’s CAGR is 38.08 percentage points higher than that of MTUM and as a result, would have yielded $41,763 more on a $10,000 investment. Thus, ARKK outperformed MTUM by 38.08% annually.


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