IJR vs. ARKK: What’s The Difference?

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

The expense ratio of IJR is 0.69 percentage points lower than ARKK’s (0.06% vs. 0.75%). IJR also has a higher exposure to the industrials sector and a higher standard deviation. Overall, IJR has provided lower returns than ARKK over the past ten years.

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

Summary

IJR ARKK
Name iShares Core S&P Small-Cap ETF ARK Innovation ETF
Category Small Blend Mid-Cap Growth
Issuer iShares ARK ETF Trust
AUM 68.64B 25.52B
Avg. Return 13.97% 55.45%
Div. Yield 0.96% 0.0%
Expense Ratio 0.06% 0.75%

The iShares Core S&P Small-Cap ETF (IJR) is a Small Blend fund that is issued by iShares. It currently has 68.64B total assets under management and has yielded an average annual return of 13.97% over the past 10 years. The fund has a dividend yield of 0.96% 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%.

IJR’s dividend yield is 0.96% higher than that of ARKK (0.96% vs. 0.0%). Also, IJR yielded on average 41.48% less per year over the past decade (13.97% vs. 55.45%). The expense ratio of IJR is 0.69 percentage points lower than ARKK’s (0.06% vs. 0.75%).

Fund Composition

Industry Exposure

IJR vs. ARKK - Industry Exposure

IJR ARKK
Technology 14.32% 30.5%
Industrials 17.31% 2.11%
Energy 4.0% 0.0%
Communication Services 2.59% 25.01%
Utilities 1.8% 0.0%
Healthcare 11.55% 29.47%
Consumer Defensive 4.01% 0.93%
Real Estate 9.55% 0.51%
Financial Services 15.91% 0.04%
Consumer Cyclical 13.61% 11.42%
Basic Materials 5.34% 0.0%

The iShares Core S&P Small-Cap ETF (IJR) has the most exposure to the Industrials sector at 17.31%. This is followed by Financial Services and Technology at 15.91% and 14.32% respectively. Communication Services (2.59%), Energy (4.0%), and Consumer Defensive (4.01%) only make up 10.60% of the fund’s total assets.

IJR’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Consumer Cyclical, and Technology stocks at 5.34%, 9.55%, 11.55%, 13.61%, and 14.32%.

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%.

IJR is 15.20% more exposed to the Industrials sector than ARKK (17.31% vs 2.11%). IJR’s exposure to Financial Services and Technology stocks is 15.87% higher and 16.18% lower respectively (15.91% vs. 0.04% and 14.32% vs. 30.5%). In total, Communication Services, Energy, and Consumer Defensive also make up 15.34% less of the fund’s holdings compared to ARKK (10.60% vs. 25.94%).

Holdings

IJR - Holdings

IJR Holdings Weight
BlackRock Cash Funds Treasury SL Agency 1.08%
GameStop Corp Class A 0.86%
Omnicell Inc 0.61%
Stamps.com Inc 0.58%
Saia Inc 0.57%
Power Integrations Inc 0.57%
Exponent Inc 0.54%
NeoGenomics Inc 0.53%
Chart Industries Inc 0.53%
Macy’s Inc 0.51%

IJR’s Top Holdings are BlackRock Cash Funds Treasury SL Agency, GameStop Corp Class A, Omnicell Inc, Stamps.com Inc, and Saia Inc at 1.08%, 0.86%, 0.61%, 0.58%, and 0.57%.

Power Integrations Inc (0.57%), Exponent Inc (0.54%), and NeoGenomics Inc (0.53%) have a slightly smaller but still significant weight. Chart Industries Inc and Macy’s Inc are also represented in the IJR’s holdings at 0.53% and 0.51%.

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%.

Risk Analysis

IJR ARKK
Mean Return 1.21 0
R-squared 76.03 0
Std. Deviation 18.68 0
Alpha -3.7 0
Beta 1.2 0
Sharpe Ratio 0.74 0
Treynor Ratio 10.77 0

The iShares Core S&P Small-Cap ETF (IJR) has a Sharpe Ratio of 0.74 with a Alpha of -3.7 and a Treynor Ratio of 10.77. Its Standard Deviation is 18.68 while IJR’s R-squared is 76.03. Furthermore, the fund has a Mean Return of 1.21 and a Beta of 1.2.

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

IJR’s Mean Return is 1.21 points higher than that of ARKK and its R-squared is 76.03 points higher. With a Standard Deviation of 18.68, IJR is slightly more volatile than ARKK. The Alpha and Beta of IJR are 3.70 points lower and 1.20 points higher than ARKK’s Alpha and Beta.

Performance

Annual Returns

IJR vs. ARKK - Annual Returns

Year IJR ARKK
2020 11.24% 152.52%
2019 22.79% 35.73%
2018 -8.43% 3.58%
2017 13.2% 87.38%
2016 26.49% -1.96%
2015 -2.0% 3.76%
2014 5.67% 0.0%
2013 41.36% 0.0%
2012 16.28% 0.0%
2011 0.9% 0.0%
2010 26.14% 0.0%

IJR had its best year in 2013 with an annual return of 41.36%. IJR’s worst year over the past decade yielded -8.43% and occurred in 2018. In most years the iShares Core S&P Small-Cap ETF provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 11.24%, 13.2%, and 16.28% 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

IJR vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IJR $10,000 $17,909 13.97%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in IJR would have resulted in a final balance of $17,909. This is a profit of $7,909 over 5 years and amounts to a compound annual growth rate (CAGR) of 13.97%.

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%.

IJR’s CAGR is 41.48 percentage points lower than that of ARKK and as a result, would have yielded $47,309 less on a $10,000 investment. Thus, IJR performed worse than ARKK by 41.48% annually.


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