The iShares Russell 1000 Growth ETF (IWF) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. IWF is a iShares Large Growth fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between IWF and ARKK? And which fund is better?
The expense ratio of IWF is 0.56 percentage points lower than ARKK’s (0.19% vs. 0.75%). IWF also has a higher exposure to the technology sector and a higher standard deviation. Overall, IWF has provided lower returns than ARKK over the past ten years.
In this article, we’ll compare IWF vs. ARKK. We’ll look at fund composition and industry exposure, as well as at their risk metrics and holdings. Moreover, I’ll also discuss IWF’s and ARKK’s annual returns, portfolio growth, and performance and examine how these affect their overall returns.
Summary
| IWF | ARKK | |
| Name | iShares Russell 1000 Growth ETF | ARK Innovation ETF |
| Category | Large Growth | Mid-Cap Growth |
| Issuer | iShares | ARK ETF Trust |
| AUM | 72.16B | 25.52B |
| Avg. Return | 17.72% | 55.45% |
| Div. Yield | 0.52% | 0.0% |
| Expense Ratio | 0.19% | 0.75% |
The iShares Russell 1000 Growth ETF (IWF) is a Large Growth fund that is issued by iShares. It currently has 72.16B total assets under management and has yielded an average annual return of 17.72% over the past 10 years. The fund has a dividend yield of 0.52% 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%.
IWF’s dividend yield is 0.52% higher than that of ARKK (0.52% vs. 0.0%). Also, IWF yielded on average 37.73% less per year over the past decade (17.72% vs. 55.45%). The expense ratio of IWF is 0.56 percentage points lower than ARKK’s (0.19% vs. 0.75%).
Fund Composition
Industry Exposure
| IWF | ARKK | |
| Technology | 39.29% | 30.5% |
| Industrials | 6.19% | 2.11% |
| Energy | 0.28% | 0.0% |
| Communication Services | 12.82% | 25.01% |
| Utilities | 0.03% | 0.0% |
| Healthcare | 9.23% | 29.47% |
| Consumer Defensive | 4.31% | 0.93% |
| Real Estate | 1.85% | 0.51% |
| Financial Services | 7.36% | 0.04% |
| Consumer Cyclical | 17.62% | 11.42% |
| Basic Materials | 1.01% | 0.0% |
The iShares Russell 1000 Growth ETF (IWF) has the most exposure to the Technology sector at 39.29%. This is followed by Consumer Cyclical and Communication Services at 17.62% and 12.82% respectively. Energy (0.28%), Basic Materials (1.01%), and Real Estate (1.85%) only make up 3.14% of the fund’s total assets.
IWF’s mid-section with moderate exposure is comprised of Consumer Defensive, Industrials, Financial Services, Healthcare, and Communication Services stocks at 4.31%, 6.19%, 7.36%, 9.23%, and 12.82%.
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%.
IWF is 8.79% more exposed to the Technology sector than ARKK (39.29% vs 30.5%). IWF’s exposure to Consumer Cyclical and Communication Services stocks is 6.20% higher and 12.19% lower respectively (17.62% vs. 11.42% and 12.82% vs. 25.01%). In total, Energy, Basic Materials, and Real Estate also make up 2.63% more of the fund’s holdings compared to ARKK (3.14% vs. 0.51%).
Holdings
| IWF Holdings | Weight |
| Apple Inc | 10.51% |
| Microsoft Corp | 9.85% |
| Amazon.com Inc | 6.63% |
| Facebook Inc Class A | 3.91% |
| Alphabet Inc Class A | 3.2% |
| Alphabet Inc Class C | 3.03% |
| Tesla Inc | 2.45% |
| NVIDIA Corp | 2.14% |
| Visa Inc Class A | 1.91% |
| The Home Depot Inc | 1.62% |
IWF’s Top Holdings are Apple Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc Class A, and Alphabet Inc Class A at 10.51%, 9.85%, 6.63%, 3.91%, and 3.2%.
Alphabet Inc Class C (3.03%), Tesla Inc (2.45%), and NVIDIA Corp (2.14%) have a slightly smaller but still significant weight. Visa Inc Class A and The Home Depot Inc are also represented in the IWF’s holdings at 1.91% and 1.62%.
| 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
| IWF | ARKK | |
| Mean Return | 1.48 | 0 |
| R-squared | 92.93 | 0 |
| Std. Deviation | 14.42 | 0 |
| Alpha | 2.16 | 0 |
| Beta | 1.03 | 0 |
| Sharpe Ratio | 1.19 | 0 |
| Treynor Ratio | 17.1 | 0 |
The iShares Russell 1000 Growth ETF (IWF) has a Standard Deviation of 14.42 with a Treynor Ratio of 17.1 and a R-squared of 92.93. Its Beta is 1.03 while IWF’s Alpha is 2.16. Furthermore, the fund has a Mean Return of 1.48 and a Sharpe Ratio of 1.19.
The ARK Innovation ETF (ARKK) has a R-squared of 0 with a Standard Deviation of 0 and a Alpha of 0. Its Sharpe Ratio is 0 while ARKK’s Mean Return is 0. Furthermore, the fund has a Beta of 0 and a Treynor Ratio of 0.
IWF’s Mean Return is 1.48 points higher than that of ARKK and its R-squared is 92.93 points higher. With a Standard Deviation of 14.42, IWF is slightly more volatile than ARKK. The Alpha and Beta of IWF are 2.16 points higher and 1.03 points higher than ARKK’s Alpha and Beta.
Performance
Annual Returns
| Year | IWF | ARKK |
| 2020 | 38.21% | 152.52% |
| 2019 | 36.08% | 35.73% |
| 2018 | -1.68% | 3.58% |
| 2017 | 29.96% | 87.38% |
| 2016 | 6.92% | -1.96% |
| 2015 | 5.48% | 3.76% |
| 2014 | 12.84% | 0.0% |
| 2013 | 33.19% | 0.0% |
| 2012 | 15.03% | 0.0% |
| 2011 | 2.47% | 0.0% |
| 2010 | 16.47% | 0.0% |
IWF had its best year in 2020 with an annual return of 38.21%. IWF’s worst year over the past decade yielded -1.68% and occurred in 2018. In most years the iShares Russell 1000 Growth ETF provided moderate returns such as in 2014, 2012, and 2010 where annual returns amounted to 12.84%, 15.03%, and 16.47% 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
| Fund | Initial Balance | Final Balance | CAGR |
| IWF | $10,000 | $25,694 | 17.72% |
| ARKK | $10,000 | $65,218 | 55.45% |
A $10,000 investment in IWF would have resulted in a final balance of $25,694. This is a profit of $15,694 over 5 years and amounts to a compound annual growth rate (CAGR) of 17.72%.
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%.
IWF’s CAGR is 37.73 percentage points lower than that of ARKK and as a result, would have yielded $39,524 less on a $10,000 investment. Thus, IWF performed worse than ARKK by 37.73% annually.
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