The iShares Core MSCI Emerging Markets ETF (IEMG) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. IEMG is a iShares Diversified Emerging Mkts fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between IEMG and ARKK? And which fund is better?
The expense ratio of IEMG is 0.64 percentage points lower than ARKK’s (0.11% vs. 0.75%). IEMG also has a lower exposure to the technology sector and a lower standard deviation. Overall, IEMG has provided lower returns than ARKK over the past ten years.
In this article, we’ll compare IEMG vs. ARKK. We’ll look at industry exposure and risk metrics, as well as at their annual returns and fund composition. Moreover, I’ll also discuss IEMG’s and ARKK’s portfolio growth, holdings, and performance and examine how these affect their overall returns.
Summary
| IEMG | ARKK | |
| Name | iShares Core MSCI Emerging Markets ETF | ARK Innovation ETF |
| Category | Diversified Emerging Mkts | Mid-Cap Growth |
| Issuer | iShares | ARK ETF Trust |
| AUM | 83.68B | 25.52B |
| Avg. Return | 7.41% | 55.45% |
| Div. Yield | 1.78% | 0.0% |
| Expense Ratio | 0.11% | 0.75% |
The iShares Core MSCI Emerging Markets ETF (IEMG) is a Diversified Emerging Mkts fund that is issued by iShares. It currently has 83.68B total assets under management and has yielded an average annual return of 7.41% over the past 10 years. The fund has a dividend yield of 1.78% with an expense ratio of 0.11%.
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%.
IEMG’s dividend yield is 1.78% higher than that of ARKK (1.78% vs. 0.0%). Also, IEMG yielded on average 48.04% less per year over the past decade (7.41% vs. 55.45%). The expense ratio of IEMG is 0.64 percentage points lower than ARKK’s (0.11% vs. 0.75%).
Fund Composition
Industry Exposure
| IEMG | ARKK | |
| Technology | 20.44% | 30.5% |
| Industrials | 5.92% | 2.11% |
| Energy | 4.71% | 0.0% |
| Communication Services | 11.41% | 25.01% |
| Utilities | 2.13% | 0.0% |
| Healthcare | 5.73% | 29.47% |
| Consumer Defensive | 5.68% | 0.93% |
| Real Estate | 2.75% | 0.51% |
| Financial Services | 16.9% | 0.04% |
| Consumer Cyclical | 15.67% | 11.42% |
| Basic Materials | 8.64% | 0.0% |
The iShares Core MSCI Emerging Markets ETF (IEMG) has the most exposure to the Technology sector at 20.44%. This is followed by Financial Services and Consumer Cyclical at 16.9% and 15.67% respectively. Real Estate (2.75%), Energy (4.71%), and Consumer Defensive (5.68%) only make up 13.14% of the fund’s total assets.
IEMG’s mid-section with moderate exposure is comprised of Healthcare, Industrials, Basic Materials, Communication Services, and Consumer Cyclical stocks at 5.73%, 5.92%, 8.64%, 11.41%, and 15.67%.
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%.
IEMG is 10.06% less exposed to the Technology sector than ARKK (20.44% vs 30.5%). IEMG’s exposure to Financial Services and Consumer Cyclical stocks is 16.86% higher and 4.25% higher respectively (16.9% vs. 0.04% and 15.67% vs. 11.42%). In total, Real Estate, Energy, and Consumer Defensive also make up 11.70% more of the fund’s holdings compared to ARKK (13.14% vs. 1.44%).
Holdings
| IEMG Holdings | Weight |
| Taiwan Semiconductor Manufacturing Co Ltd | 5.37% |
| Tencent Holdings Ltd | 4.42% |
| Alibaba Group Holding Ltd Ordinary Shares | 4.38% |
| Samsung Electronics Co Ltd | 3.49% |
| Meituan | 1.52% |
| Naspers Ltd Class N | 0.93% |
| Vale SA | 0.91% |
| Reliance Industries Ltd Shs Dematerialised | 0.83% |
| China Construction Bank Corp Class H | 0.77% |
| Infosys Ltd | 0.74% |
IEMG’s Top Holdings are Taiwan Semiconductor Manufacturing Co Ltd, Tencent Holdings Ltd, Alibaba Group Holding Ltd Ordinary Shares, Samsung Electronics Co Ltd, and Meituan at 5.37%, 4.42%, 4.38%, 3.49%, and 1.52%.
Naspers Ltd Class N (0.93%), Vale SA (0.91%), and Reliance Industries Ltd Shs Dematerialised (0.83%) have a slightly smaller but still significant weight. China Construction Bank Corp Class H and Infosys Ltd are also represented in the IEMG’s holdings at 0.77% and 0.74%.
| 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%.
Risk Analysis
| IEMG | ARKK | |
| 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 iShares Core MSCI Emerging Markets ETF (IEMG) has a Alpha of 0 with a Treynor Ratio of 0 and a Beta of 0. Its Standard Deviation is 0 while IEMG’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Mean Return of 0.
The ARK Innovation ETF (ARKK) has a R-squared of 0 with a Mean Return of 0 and a Beta of 0. Its Sharpe Ratio is 0 while ARKK’s Treynor Ratio is 0. Furthermore, the fund has a Standard Deviation of 0 and a Alpha of 0.
IEMG’s Mean Return is 0.00 points lower than that of ARKK and its R-squared is 0.00 points lower. With a Standard Deviation of 0, IEMG is slightly less volatile than ARKK. The Alpha and Beta of IEMG are 0.00 points lower and 0.00 points lower than ARKK’s Alpha and Beta.
Performance
Annual Returns
| Year | IEMG | ARKK |
| 2020 | 18.18% | 152.52% |
| 2019 | 17.5% | 35.73% |
| 2018 | -14.69% | 3.58% |
| 2017 | 36.78% | 87.38% |
| 2016 | 9.98% | -1.96% |
| 2015 | -13.86% | 3.76% |
| 2014 | -2.04% | 0.0% |
| 2013 | -2.16% | 0.0% |
| 2012 | 0.0% | 0.0% |
| 2011 | 0.0% | 0.0% |
| 2010 | 0.0% | 0.0% |
IEMG had its best year in 2017 with an annual return of 36.78%. IEMG’s worst year over the past decade yielded -14.69% and occurred in 2018. In most years the iShares Core MSCI Emerging Markets ETF provided moderate returns such as in 2012, 2011, and 2010 where annual returns amounted to 0.0%, 0.0%, and 0.0% respectively.
The year 2020 was the strongest year for ARKK, returning 152.52% on an annual basis. The poorest year for ARKK in the last ten years was 2016, with a yield of -1.96%. Most years the ARK Innovation ETF has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 3.58% respectively.
Portfolio Growth
| Fund | Initial Balance | Final Balance | CAGR |
| IEMG | $10,000 | $17,820 | 7.41% |
| ARKK | $10,000 | $65,218 | 55.45% |
A $10,000 investment in IEMG would have resulted in a final balance of $17,820. This is a profit of $7,820 over 5 years and amounts to a compound annual growth rate (CAGR) of 7.41%.
With a $10,000 investment in ARKK, the end total would have been $65,218. This equates to a $55,218 profit over 5 years and a compound annual growth rate (CAGR) of 55.45%.
IEMG’s CAGR is 48.04 percentage points lower than that of ARKK and as a result, would have yielded $47,398 less on a $10,000 investment. Thus, IEMG performed worse than ARKK by 48.04% annually.
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