IVW vs. ARKK: What’s The Difference?

The iShares S&P 500 Growth ETF (IVW) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. IVW is a iShares Large Growth fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between IVW and ARKK? And which fund is better?

The expense ratio of IVW is 0.57 percentage points lower than ARKK’s (0.18% vs. 0.75%). IVW also has a higher exposure to the technology sector and a higher standard deviation. Overall, IVW has provided lower returns than ARKK over the past ten years.

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

Summary

IVW ARKK
Name iShares S&P 500 Growth ETF ARK Innovation ETF
Category Large Growth Mid-Cap Growth
Issuer iShares ARK ETF Trust
AUM 35.72B 25.52B
Avg. Return 16.74% 55.45%
Div. Yield 0.61% 0.0%
Expense Ratio 0.18% 0.75%

The iShares S&P 500 Growth ETF (IVW) is a Large Growth fund that is issued by iShares. It currently has 35.72B total assets under management and has yielded an average annual return of 16.74% over the past 10 years. The fund has a dividend yield of 0.61% with an expense ratio of 0.18%.

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%.

IVW’s dividend yield is 0.61% higher than that of ARKK (0.61% vs. 0.0%). Also, IVW yielded on average 38.71% less per year over the past decade (16.74% vs. 55.45%). The expense ratio of IVW is 0.57 percentage points lower than ARKK’s (0.18% vs. 0.75%).

Fund Composition

Industry Exposure

IVW vs. ARKK - Industry Exposure

IVW ARKK
Technology 37.8% 30.5%
Industrials 5.72% 2.11%
Energy 0.06% 0.0%
Communication Services 15.44% 25.01%
Utilities 0.47% 0.0%
Healthcare 11.88% 29.47%
Consumer Defensive 3.84% 0.93%
Real Estate 1.11% 0.51%
Financial Services 6.78% 0.04%
Consumer Cyclical 15.25% 11.42%
Basic Materials 1.65% 0.0%

The iShares S&P 500 Growth ETF (IVW) has the most exposure to the Technology sector at 37.8%. This is followed by Communication Services and Consumer Cyclical at 15.44% and 15.25% respectively. Utilities (0.47%), Real Estate (1.11%), and Basic Materials (1.65%) only make up 3.23% of the fund’s total assets.

IVW’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Consumer Cyclical stocks at 3.84%, 5.72%, 6.78%, 11.88%, and 15.25%.

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%.

IVW is 7.30% more exposed to the Technology sector than ARKK (37.8% vs 30.5%). IVW’s exposure to Communication Services and Consumer Cyclical stocks is 9.57% lower and 3.83% higher respectively (15.44% vs. 25.01% and 15.25% vs. 11.42%). In total, Utilities, Real Estate, and Basic Materials also make up 2.72% more of the fund’s holdings compared to ARKK (3.23% vs. 0.51%).

Holdings

IVW - Holdings

IVW Holdings Weight
Apple Inc 11.46%
Microsoft Corp 10.75%
Amazon.com Inc 7.14%
Facebook Inc Class A 4.28%
Alphabet Inc Class A 4.06%
Alphabet Inc Class C 3.86%
Tesla Inc 2.65%
NVIDIA Corp 2.43%
PayPal Holdings Inc 1.62%
Adobe Inc 1.49%

IVW’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 11.46%, 10.75%, 7.14%, 4.28%, and 4.06%.

Alphabet Inc Class C (3.86%), Tesla Inc (2.65%), and NVIDIA Corp (2.43%) have a slightly smaller but still significant weight. PayPal Holdings Inc and Adobe Inc are also represented in the IVW’s holdings at 1.62% and 1.49%.

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

IVW ARKK
Mean Return 1.44 0
R-squared 93.82 0
Std. Deviation 13.77 0
Alpha 2.19 0
Beta 0.98 0
Sharpe Ratio 1.21 0
Treynor Ratio 17.24 0

The iShares S&P 500 Growth ETF (IVW) has a Mean Return of 1.44 with a Alpha of 2.19 and a Treynor Ratio of 17.24. Its Standard Deviation is 13.77 while IVW’s Sharpe Ratio is 1.21. Furthermore, the fund has a R-squared of 93.82 and a Beta of 0.98.

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

IVW’s Mean Return is 1.44 points higher than that of ARKK and its R-squared is 93.82 points higher. With a Standard Deviation of 13.77, IVW is slightly more volatile than ARKK. The Alpha and Beta of IVW are 2.19 points higher and 0.98 points higher than ARKK’s Alpha and Beta.

Performance

Annual Returns

IVW vs. ARKK - Annual Returns

Year IVW ARKK
2020 33.21% 152.52%
2019 30.91% 35.73%
2018 -0.17% 3.58%
2017 27.2% 87.38%
2016 6.74% -1.96%
2015 5.33% 3.76%
2014 14.67% 0.0%
2013 32.48% 0.0%
2012 14.39% 0.0%
2011 4.49% 0.0%
2010 14.84% 0.0%

IVW had its best year in 2020 with an annual return of 33.21%. IVW’s worst year over the past decade yielded -0.17% and occurred in 2018. In most years the iShares S&P 500 Growth ETF provided moderate returns such as in 2012, 2014, and 2010 where annual returns amounted to 14.39%, 14.67%, and 14.84% 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

IVW vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IVW $10,000 $23,636 16.74%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in IVW would have resulted in a final balance of $23,636. This is a profit of $13,636 over 5 years and amounts to a compound annual growth rate (CAGR) of 16.74%.

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%.

IVW’s CAGR is 38.71 percentage points lower than that of ARKK and as a result, would have yielded $41,582 less on a $10,000 investment. Thus, IVW performed worse than ARKK by 38.71% annually.


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