IWD vs. ARKK: What’s The Difference?

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

The expense ratio of IWD is 0.56 percentage points lower than ARKK’s (0.19% vs. 0.75%). IWD also has a higher exposure to the financial services sector and a higher standard deviation. Overall, IWD has provided lower returns than ARKK over the past ten years.

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

Summary

IWD ARKK
Name iShares Russell 1000 Value ETF ARK Innovation ETF
Category Large Value Mid-Cap Growth
Issuer iShares ARK ETF Trust
AUM 54.1B 25.52B
Avg. Return 11.40% 55.45%
Div. Yield 1.57% 0.0%
Expense Ratio 0.19% 0.75%

The iShares Russell 1000 Value ETF (IWD) is a Large Value fund that is issued by iShares. It currently has 54.1B total assets under management and has yielded an average annual return of 11.40% over the past 10 years. The fund has a dividend yield of 1.57% with an expense ratio of 0.19%.

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%.

IWD’s dividend yield is 1.57% higher than that of ARKK (1.57% vs. 0.0%). Also, IWD yielded on average 44.05% less per year over the past decade (11.40% vs. 55.45%). The expense ratio of IWD is 0.56 percentage points lower than ARKK’s (0.19% vs. 0.75%).

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Fund Composition

Industry Exposure

IWD vs. ARKK - Industry Exposure

IWD ARKK
Technology 10.28% 30.5%
Industrials 11.77% 2.11%
Energy 4.76% 0.0%
Communication Services 8.67% 25.01%
Utilities 4.88% 0.0%
Healthcare 17.78% 29.47%
Consumer Defensive 7.76% 0.93%
Real Estate 4.94% 0.51%
Financial Services 20.43% 0.04%
Consumer Cyclical 5.62% 11.42%
Basic Materials 3.1% 0.0%

The iShares Russell 1000 Value ETF (IWD) has the most exposure to the Financial Services sector at 20.43%. This is followed by Healthcare and Industrials at 17.78% and 11.77% respectively. Energy (4.76%), Utilities (4.88%), and Real Estate (4.94%) only make up 14.58% of the fund’s total assets.

IWD’s mid-section with moderate exposure is comprised of Consumer Cyclical, Consumer Defensive, Communication Services, Technology, and Industrials stocks at 5.62%, 7.76%, 8.67%, 10.28%, and 11.77%.

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%.

IWD is 20.39% more exposed to the Financial Services sector than ARKK (20.43% vs 0.04%). IWD’s exposure to Healthcare and Industrials stocks is 11.69% lower and 9.66% higher respectively (17.78% vs. 29.47% and 11.77% vs. 2.11%). In total, Energy, Utilities, and Real Estate also make up 14.07% more of the fund’s holdings compared to ARKK (14.58% vs. 0.51%).

Holdings

IWD - Holdings

IWD Holdings Weight
Berkshire Hathaway Inc Class B 2.58%
JPMorgan Chase & Co 2.25%
Johnson & Johnson 2.24%
UnitedHealth Group Inc 1.78%
Procter & Gamble Co 1.71%
The Walt Disney Co 1.5%
Bank of America Corp 1.43%
Comcast Corp Class A 1.33%
Exxon Mobil Corp 1.2%
Pfizer Inc 1.18%

IWD’s Top Holdings are Berkshire Hathaway Inc Class B, JPMorgan Chase & Co, Johnson & Johnson, UnitedHealth Group Inc, and Procter & Gamble Co at 2.58%, 2.25%, 2.24%, 1.78%, and 1.71%.

The Walt Disney Co (1.5%), Bank of America Corp (1.43%), and Comcast Corp Class A (1.33%) have a slightly smaller but still significant weight. Exxon Mobil Corp and Pfizer Inc are also represented in the IWD’s holdings at 1.2% and 1.18%.

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%.

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Risk Analysis

IWD ARKK
Mean Return 1.03 0
R-squared 92.38 0
Std. Deviation 14.35 0
Alpha -3.23 0
Beta 1.02 0
Sharpe Ratio 0.81 0
Treynor Ratio 11.06 0

The iShares Russell 1000 Value ETF (IWD) has a Standard Deviation of 14.35 with a Alpha of -3.23 and a Sharpe Ratio of 0.81. Its Treynor Ratio is 11.06 while IWD’s Beta is 1.02. Furthermore, the fund has a R-squared of 92.38 and a Mean Return of 1.03.

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

IWD’s Mean Return is 1.03 points higher than that of ARKK and its R-squared is 92.38 points higher. With a Standard Deviation of 14.35, IWD is slightly more volatile than ARKK. The Alpha and Beta of IWD are 3.23 points lower and 1.02 points higher than ARKK’s Alpha and Beta.

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Performance

Annual Returns

IWD vs. ARKK - Annual Returns

Year IWD ARKK
2020 2.67% 152.52%
2019 26.34% 35.73%
2018 -8.4% 3.58%
2017 13.47% 87.38%
2016 17.09% -1.96%
2015 -3.95% 3.76%
2014 13.21% 0.0%
2013 32.18% 0.0%
2012 17.28% 0.0%
2011 0.21% 0.0%
2010 15.3% 0.0%

IWD had its best year in 2013 with an annual return of 32.18%. IWD’s worst year over the past decade yielded -8.4% and occurred in 2018. In most years the iShares Russell 1000 Value ETF provided moderate returns such as in 2014, 2017, and 2010 where annual returns amounted to 13.21%, 13.47%, and 15.3% 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

IWD vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
IWD $10,000 $15,786 11.40%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in IWD would have resulted in a final balance of $15,786. This is a profit of $5,786 over 5 years and amounts to a compound annual growth rate (CAGR) of 11.40%.

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%.

IWD’s CAGR is 44.05 percentage points lower than that of ARKK and as a result, would have yielded $49,432 less on a $10,000 investment. Thus, IWD performed worse than ARKK by 44.05% annually.


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