The iShares Russell Mid-Cap ETF (IWR) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. IWR is a iShares Mid-Cap Blend fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between IWR and ARKK? And which fund is better?
The expense ratio of IWR is 0.56 percentage points lower than ARKK’s (0.19% vs. 0.75%). IWR also has a lower exposure to the technology sector and a higher standard deviation. Overall, IWR has provided lower returns than ARKK over the past ten years.
In this article, we’ll compare IWR vs. ARKK. We’ll look at portfolio growth and performance, as well as at their risk metrics and holdings. Moreover, I’ll also discuss IWR’s and ARKK’s industry exposure, annual returns, and fund composition and examine how these affect their overall returns.
Summary
| IWR | ARKK | |
| Name | iShares Russell Mid-Cap ETF | ARK Innovation ETF |
| Category | Mid-Cap Blend | Mid-Cap Growth |
| Issuer | iShares | ARK ETF Trust |
| AUM | 29.84B | 25.52B |
| Avg. Return | 14.15% | 55.45% |
| Div. Yield | 0.99% | 0.0% |
| Expense Ratio | 0.19% | 0.75% |
The iShares Russell Mid-Cap ETF (IWR) is a Mid-Cap Blend fund that is issued by iShares. It currently has 29.84B total assets under management and has yielded an average annual return of 14.15% over the past 10 years. The fund has a dividend yield of 0.99% 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%.
IWR’s dividend yield is 0.99% higher than that of ARKK (0.99% vs. 0.0%). Also, IWR yielded on average 41.30% less per year over the past decade (14.15% vs. 55.45%). The expense ratio of IWR is 0.56 percentage points lower than ARKK’s (0.19% vs. 0.75%).
Fund Composition
Industry Exposure
| IWR | ARKK | |
| Technology | 19.67% | 30.5% |
| Industrials | 14.54% | 2.11% |
| Energy | 3.48% | 0.0% |
| Communication Services | 4.64% | 25.01% |
| Utilities | 4.46% | 0.0% |
| Healthcare | 11.76% | 29.47% |
| Consumer Defensive | 3.82% | 0.93% |
| Real Estate | 8.31% | 0.51% |
| Financial Services | 11.64% | 0.04% |
| Consumer Cyclical | 13.59% | 11.42% |
| Basic Materials | 4.1% | 0.0% |
The iShares Russell Mid-Cap ETF (IWR) has the most exposure to the Technology sector at 19.67%. This is followed by Industrials and Consumer Cyclical at 14.54% and 13.59% respectively. Consumer Defensive (3.82%), Basic Materials (4.1%), and Utilities (4.46%) only make up 12.38% of the fund’s total assets.
IWR’s mid-section with moderate exposure is comprised of Communication Services, Real Estate, Financial Services, Healthcare, and Consumer Cyclical stocks at 4.64%, 8.31%, 11.64%, 11.76%, 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%.
IWR is 10.83% less exposed to the Technology sector than ARKK (19.67% vs 30.5%). IWR’s exposure to Industrials and Consumer Cyclical stocks is 12.43% higher and 2.17% higher respectively (14.54% vs. 2.11% and 13.59% vs. 11.42%). In total, Consumer Defensive, Basic Materials, and Utilities also make up 11.45% more of the fund’s holdings compared to ARKK (12.38% vs. 0.93%).
Holdings
| IWR Holdings | Weight |
| IDEXX Laboratories Inc | 0.51% |
| DocuSign Inc | 0.51% |
| Twitter Inc | 0.48% |
| Chipotle Mexican Grill Inc | 0.47% |
| Roku Inc Class A | 0.44% |
| Marvell Technology Inc | 0.44% |
| DexCom Inc | 0.44% |
| Trane Technologies PLC | 0.43% |
| MSCI Inc | 0.43% |
| Carrier Global Corp Ordinary Shares | 0.43% |
IWR’s Top Holdings are IDEXX Laboratories Inc, DocuSign Inc, Twitter Inc, Chipotle Mexican Grill Inc, and Roku Inc Class A at 0.51%, 0.51%, 0.48%, 0.47%, and 0.44%.
Marvell Technology Inc (0.44%), DexCom Inc (0.44%), and Trane Technologies PLC (0.43%) have a slightly smaller but still significant weight. MSCI Inc and Carrier Global Corp Ordinary Shares are also represented in the IWR’s holdings at 0.43% and 0.43%.
| 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
| IWR | ARKK | |
| Mean Return | 1.17 | 0 |
| R-squared | 91.52 | 0 |
| Std. Deviation | 15.66 | 0 |
| Alpha | -2.8 | 0 |
| Beta | 1.11 | 0 |
| Sharpe Ratio | 0.86 | 0 |
| Treynor Ratio | 11.72 | 0 |
The iShares Russell Mid-Cap ETF (IWR) has a Treynor Ratio of 11.72 with a Alpha of -2.8 and a R-squared of 91.52. Its Sharpe Ratio is 0.86 while IWR’s Standard Deviation is 15.66. Furthermore, the fund has a Beta of 1.11 and a Mean Return of 1.17.
The ARK Innovation ETF (ARKK) has a R-squared of 0 with a Alpha of 0 and a Mean Return of 0. Its Beta is 0 while ARKK’s Sharpe Ratio is 0. Furthermore, the fund has a Treynor Ratio of 0 and a Standard Deviation of 0.
IWR’s Mean Return is 1.17 points higher than that of ARKK and its R-squared is 91.52 points higher. With a Standard Deviation of 15.66, IWR is slightly more volatile than ARKK. The Alpha and Beta of IWR are 2.80 points lower and 1.11 points higher than ARKK’s Alpha and Beta.
Performance
Annual Returns
| Year | IWR | ARKK |
| 2020 | 16.91% | 152.52% |
| 2019 | 30.31% | 35.73% |
| 2018 | -9.13% | 3.58% |
| 2017 | 18.32% | 87.38% |
| 2016 | 13.58% | -1.96% |
| 2015 | -2.57% | 3.76% |
| 2014 | 13.03% | 0.0% |
| 2013 | 34.5% | 0.0% |
| 2012 | 17.13% | 0.0% |
| 2011 | -1.67% | 0.0% |
| 2010 | 25.25% | 0.0% |
IWR had its best year in 2013 with an annual return of 34.5%. IWR’s worst year over the past decade yielded -9.13% and occurred in 2018. In most years the iShares Russell Mid-Cap ETF provided moderate returns such as in 2016, 2020, and 2012 where annual returns amounted to 13.58%, 16.91%, and 17.13% 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 |
| IWR | $10,000 | $18,604 | 14.15% |
| ARKK | $10,000 | $65,218 | 55.45% |
A $10,000 investment in IWR would have resulted in a final balance of $18,604. This is a profit of $8,604 over 5 years and amounts to a compound annual growth rate (CAGR) of 14.15%.
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%.
IWR’s CAGR is 41.30 percentage points lower than that of ARKK and as a result, would have yielded $46,614 less on a $10,000 investment. Thus, IWR performed worse than ARKK by 41.30% annually.
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