The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. IGSB is a iShares Short-Term Bond fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between IGSB and ARKK? And which fund is better?
The expense ratio of IGSB is 0.69 percentage points lower than ARKK’s (0.06% vs. 0.75%). IGSB is mostly comprised of BBB bonds while ARKK has a high exposure to the technology sector. Overall, IGSB has provided lower returns than ARKK over the past 5 years.
In this article, we’ll compare IGSB vs. ARKK. We’ll look at portfolio growth and annual returns, as well as at their risk metrics and industry exposure. Moreover, I’ll also discuss IGSB’s and ARKK’s performance, fund composition, and holdings and examine how these affect their overall returns.
|Name||iShares 1-5 Year Investment Grade Corporate Bond ETF||ARK Innovation ETF|
|Category||Short-Term Bond||Mid-Cap Growth|
|Issuer||iShares||ARK ETF Trust|
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) is a Short-Term Bond fund that is issued by iShares. It currently has 26.63B total assets under management and has yielded an average annual return of 2.51% over the past 10 years. The fund has a dividend yield of 2.02% with an expense ratio of 0.06%.
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%.
IGSB’s dividend yield is 2.02% higher than that of ARKK (2.02% vs. 0.0%). Also, IGSB yielded on average 52.94% less per year over the past decade (2.51% vs. 55.45%). The expense ratio of IGSB is 0.69 percentage points lower than ARKK’s (0.06% vs. 0.75%).
|IGSB Bond Sectors||Weight|
IGSB’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and BB at 50.48%, 40.04%, 7.46%, 2.21%, and 0.09%. The fund is less weighted towards Below B (0.0%), B (0.0%), and US Government (0.0%) rated bonds.
|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%.
The iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) has a Standard Deviation of 2 with a Treynor Ratio of 4.82 and a Alpha of 0.69. Its Mean Return is 0.19 while IGSB’s R-squared is 26.13. Furthermore, the fund has a Beta of 0.34 and a Sharpe Ratio of 0.82.
The ARK Innovation ETF (ARKK) has a Sharpe Ratio of 0 with a Standard Deviation of 0 and a Alpha of 0. Its Treynor Ratio is 0 while ARKK’s Mean Return is 0. Furthermore, the fund has a R-squared of 0 and a Beta of 0.
IGSB’s Mean Return is 0.19 points higher than that of ARKK and its R-squared is 26.13 points higher. With a Standard Deviation of 2, IGSB is slightly more volatile than ARKK. The Alpha and Beta of IGSB are 0.69 points higher and 0.34 points higher than ARKK’s Alpha and Beta.
IGSB had its best year in 2019 with an annual return of 7.01%. IGSB’s worst year over the past decade yielded 0.7% and occurred in 2015. In most years the iShares 1-5 Year Investment Grade Corporate Bond ETF provided moderate returns such as in 2011, 2017, and 2016 where annual returns amounted to 1.34%, 1.41%, and 1.77% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in IGSB would have resulted in a final balance of $11,780. This is a profit of $1,780 over 5 years and amounts to a compound annual growth rate (CAGR) of 2.51%.
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%.
IGSB’s CAGR is 52.94 percentage points lower than that of ARKK and as a result, would have yielded $53,438 less on a $10,000 investment. Thus, IGSB performed worse than ARKK by 52.94% annually.
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