IWB vs. ARKK: What’s The Difference?

The iShares Russell 1000 ETF (IWB) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. IWB is a iShares Large Blend fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between IWB and ARKK? And which fund is better?

The expense ratio of IWB is 0.60 percentage points lower than ARKK’s (0.15% vs. 0.75%). IWB also has a lower exposure to the technology sector and a higher standard deviation. Overall, IWB has provided lower returns than ARKK over the past ten years.

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

Summary

IWB ARKK
Name iShares Russell 1000 ETF ARK Innovation ETF
Category Large Blend Mid-Cap Growth
Issuer iShares ARK ETF Trust
AUM 30.54B 25.52B
Avg. Return 14.64% 55.45%
Div. Yield 1.14% 0.0%
Expense Ratio 0.15% 0.75%

The iShares Russell 1000 ETF (IWB) is a Large Blend fund that is issued by iShares. It currently has 30.54B total assets under management and has yielded an average annual return of 14.64% over the past 10 years. The fund has a dividend yield of 1.14% with an expense ratio of 0.15%.

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%.

IWB’s dividend yield is 1.14% higher than that of ARKK (1.14% vs. 0.0%). Also, IWB yielded on average 40.81% less per year over the past decade (14.64% vs. 55.45%). The expense ratio of IWB is 0.60 percentage points lower than ARKK’s (0.15% vs. 0.75%).

Fund Composition

Industry Exposure

IWB vs. ARKK - Industry Exposure

IWB ARKK
Technology 25.33% 30.5%
Industrials 8.88% 2.11%
Energy 2.44% 0.0%
Communication Services 10.83% 25.01%
Utilities 2.36% 0.0%
Healthcare 13.35% 29.47%
Consumer Defensive 5.97% 0.93%
Real Estate 3.34% 0.51%
Financial Services 13.64% 0.04%
Consumer Cyclical 11.85% 11.42%
Basic Materials 2.02% 0.0%

The iShares Russell 1000 ETF (IWB) has the most exposure to the Technology sector at 25.33%. This is followed by Financial Services and Healthcare at 13.64% and 13.35% respectively. Utilities (2.36%), Energy (2.44%), and Real Estate (3.34%) only make up 8.14% of the fund’s total assets.

IWB’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Communication Services, Consumer Cyclical, and Healthcare stocks at 5.97%, 8.88%, 10.83%, 11.85%, and 13.35%.

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%.

IWB is 5.17% less exposed to the Technology sector than ARKK (25.33% vs 30.5%). IWB’s exposure to Financial Services and Healthcare stocks is 13.60% higher and 16.12% lower respectively (13.64% vs. 0.04% and 13.35% vs. 29.47%). In total, Utilities, Energy, and Real Estate also make up 7.63% more of the fund’s holdings compared to ARKK (8.14% vs. 0.51%).

Holdings

IWB - Holdings

IWB Holdings Weight
Apple Inc 5.45%
Microsoft Corp 5.11%
Amazon.com Inc 3.43%
Facebook Inc Class A 2.03%
Alphabet Inc Class A 1.93%
Alphabet Inc Class C 1.82%
Tesla Inc 1.27%
Berkshire Hathaway Inc Class B 1.24%
NVIDIA Corp 1.11%
JPMorgan Chase & Co 1.09%

IWB’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 5.45%, 5.11%, 3.43%, 2.03%, and 1.93%.

Alphabet Inc Class C (1.82%), Tesla Inc (1.27%), and Berkshire Hathaway Inc Class B (1.24%) have a slightly smaller but still significant weight. NVIDIA Corp and JPMorgan Chase & Co are also represented in the IWB’s holdings at 1.11% and 1.09%.

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

IWB ARKK
Mean Return 1.27 0
R-squared 99.73 0
Std. Deviation 13.87 0
Alpha -0.38 0
Beta 1.02 0
Sharpe Ratio 1.05 0
Treynor Ratio 14.31 0

The iShares Russell 1000 ETF (IWB) has a Beta of 1.02 with a Sharpe Ratio of 1.05 and a Treynor Ratio of 14.31. Its Mean Return is 1.27 while IWB’s Alpha is -0.38. Furthermore, the fund has a Standard Deviation of 13.87 and a R-squared of 99.73.

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

IWB’s Mean Return is 1.27 points higher than that of ARKK and its R-squared is 99.73 points higher. With a Standard Deviation of 13.87, IWB is slightly more volatile than ARKK. The Alpha and Beta of IWB are 0.38 points lower and 1.02 points higher than ARKK’s Alpha and Beta.

Performance

Annual Returns

IWB vs. ARKK - Annual Returns

Year IWB ARKK
2020 20.8% 152.52%
2019 31.26% 35.73%
2018 -4.91% 3.58%
2017 21.53% 87.38%
2016 11.91% -1.96%
2015 0.82% 3.76%
2014 13.08% 0.0%
2013 32.93% 0.0%
2012 16.27% 0.0%
2011 1.36% 0.0%
2010 15.94% 0.0%

IWB had its best year in 2013 with an annual return of 32.93%. IWB’s worst year over the past decade yielded -4.91% and occurred in 2018. In most years the iShares Russell 1000 ETF provided moderate returns such as in 2014, 2010, and 2012 where annual returns amounted to 13.08%, 15.94%, and 16.27% 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

IWB vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWB $10,000 $20,506 14.64%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in IWB would have resulted in a final balance of $20,506. This is a profit of $10,506 over 5 years and amounts to a compound annual growth rate (CAGR) of 14.64%.

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%.

IWB’s CAGR is 40.81 percentage points lower than that of ARKK and as a result, would have yielded $44,712 less on a $10,000 investment. Thus, IWB performed worse than ARKK by 40.81% annually.


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