The iShares Core S&P Total U.S. Stock Market ETF (ITOT) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. ITOT is a iShares Large Blend fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between ITOT and ARKK? And which fund is better?
The expense ratio of ITOT is 0.72 percentage points lower than ARKK’s (0.03% vs. 0.75%). ITOT also has a lower exposure to the technology sector and a higher standard deviation. Overall, ITOT has provided lower returns than ARKK over the past ten years.
In this article, we’ll compare ITOT vs. ARKK. We’ll look at performance and fund composition, as well as at their holdings and risk metrics. Moreover, I’ll also discuss ITOT’s and ARKK’s annual returns, portfolio growth, and industry exposure and examine how these affect their overall returns.
|Name||iShares Core S&P Total U.S. Stock Market ETF||ARK Innovation ETF|
|Category||Large Blend||Mid-Cap Growth|
|Issuer||iShares||ARK ETF Trust|
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) is a Large Blend fund that is issued by iShares. It currently has 41.97B total assets under management and has yielded an average annual return of 14.59% over the past 10 years. The fund has a dividend yield of 1.2% with an expense ratio of 0.03%.
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%.
ITOT’s dividend yield is 1.20% higher than that of ARKK (1.2% vs. 0.0%). Also, ITOT yielded on average 40.86% less per year over the past decade (14.59% vs. 55.45%). The expense ratio of ITOT is 0.72 percentage points lower than ARKK’s (0.03% vs. 0.75%).
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The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has the most exposure to the Technology sector at 24.49%. This is followed by Financial Services and Healthcare at 13.69% and 13.59% respectively. Basic Materials (2.47%), Energy (2.51%), and Real Estate (3.67%) only make up 8.65% of the fund’s total assets.
ITOT’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.79%, 9.21%, 10.54%, 11.69%, and 13.59%.
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%.
ITOT is 6.01% less exposed to the Technology sector than ARKK (24.49% vs 30.5%). ITOT’s exposure to Financial Services and Healthcare stocks is 13.65% higher and 15.88% lower respectively (13.69% vs. 0.04% and 13.59% vs. 29.47%). In total, Basic Materials, Energy, and Real Estate also make up 8.14% more of the fund’s holdings compared to ARKK (8.65% vs. 0.51%).
|Facebook Inc Class A||1.89%|
|Alphabet Inc Class A||1.79%|
|Alphabet Inc Class C||1.71%|
|Berkshire Hathaway Inc Class B||1.17%|
|JPMorgan Chase & Co||1.02%|
ITOT’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.07%, 4.75%, 3.16%, 1.89%, and 1.79%.
Alphabet Inc Class C (1.71%), Tesla Inc (1.17%), and Berkshire Hathaway Inc Class B (1.17%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the ITOT’s holdings at 1.08% and 1.02%.
|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%.
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The iShares Core S&P Total U.S. Stock Market ETF (ITOT) has a R-squared of 99.4 with a Mean Return of 1.27 and a Beta of 1.03. Its Sharpe Ratio is 1.04 while ITOT’s Standard Deviation is 14.02. Furthermore, the fund has a Alpha of -0.54 and a Treynor Ratio of 14.13.
The ARK Innovation ETF (ARKK) has a Mean Return of 0 with a Alpha of 0 and a Beta of 0. Its Standard Deviation is 0 while ARKK’s R-squared is 0. Furthermore, the fund has a Sharpe Ratio of 0 and a Treynor Ratio of 0.
ITOT’s Mean Return is 1.27 points higher than that of ARKK and its R-squared is 99.40 points higher. With a Standard Deviation of 14.02, ITOT is slightly more volatile than ARKK. The Alpha and Beta of ITOT are 0.54 points lower and 1.03 points higher than ARKK’s Alpha and Beta.
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ITOT had its best year in 2013 with an annual return of 32.67%. ITOT’s worst year over the past decade yielded -5.27% and occurred in 2018. In most years the iShares Core S&P Total U.S. Stock Market ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 13.01%, 15.98%, and 16.15% 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 ITOT would have resulted in a final balance of $20,432. This is a profit of $10,432 over 5 years and amounts to a compound annual growth rate (CAGR) of 14.59%.
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%.
ITOT’s CAGR is 40.86 percentage points lower than that of ARKK and as a result, would have yielded $44,786 less on a $10,000 investment. Thus, ITOT performed worse than ARKK by 40.86% annually.
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