MBB vs. ARKK: What’s The Difference?

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

The expense ratio of MBB is 0.69 percentage points lower than ARKK’s (0.06% vs. 0.75%). MBB is mostly comprised of AAA bonds while ARKK has a high exposure to the technology sector. Overall, MBB has provided lower returns than ARKK over the past 5 years.

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

Summary

MBB ARKK
Name iShares MBS ETF ARK Innovation ETF
Category Intermediate Government Mid-Cap Growth
Issuer iShares ARK ETF Trust
AUM 25.69B 25.52B
Avg. Return 3.08% 55.45%
Div. Yield 1.88% 0.0%
Expense Ratio 0.06% 0.75%

The iShares MBS ETF (MBB) is a Intermediate Government fund that is issued by iShares. It currently has 25.69B total assets under management and has yielded an average annual return of 3.08% over the past 10 years. The fund has a dividend yield of 1.88% with an expense ratio of 0.06%.

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%.

MBB’s dividend yield is 1.88% higher than that of ARKK (1.88% vs. 0.0%). Also, MBB yielded on average 52.37% less per year over the past decade (3.08% vs. 55.45%). The expense ratio of MBB is 0.69 percentage points lower than ARKK’s (0.06% vs. 0.75%).

Fund Composition

Holdings

MBB - Holdings

MBB Bond Sectors Weight
AAA 99.51%
Others 0.49%
Below B 0.0%
B 0.0%
BB 0.0%
BBB 0.0%
A 0.0%
AA 0.0%
US Government 0.0%

MBB’s Top Bond Sectors are ratings of AAA, Others, Below B, B, and BB at 99.51%, 0.49%, 0.0%, 0.0%, and 0.0%. The fund is less weighted towards BBB (0.0%), A (0.0%), and AA (0.0%) rated bonds.

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

MBB ARKK
Mean Return 0.2 0
R-squared 74.38 0
Std. Deviation 2.12 0
Alpha 0.14 0
Beta 0.6 0
Sharpe Ratio 0.87 0
Treynor Ratio 3.02 0

The iShares MBS ETF (MBB) has a R-squared of 74.38 with a Standard Deviation of 2.12 and a Alpha of 0.14. Its Sharpe Ratio is 0.87 while MBB’s Mean Return is 0.2. Furthermore, the fund has a Beta of 0.6 and a Treynor Ratio of 3.02.

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

MBB’s Mean Return is 0.20 points higher than that of ARKK and its R-squared is 74.38 points higher. With a Standard Deviation of 2.12, MBB is slightly more volatile than ARKK. The Alpha and Beta of MBB are 0.14 points higher and 0.60 points higher than ARKK’s Alpha and Beta.

Performance

Annual Returns

MBB vs. ARKK - Annual Returns

Year MBB ARKK
2020 4.03% 152.52%
2019 6.27% 35.73%
2018 0.81% 3.58%
2017 2.37% 87.38%
2016 1.28% -1.96%
2015 1.28% 3.76%
2014 6.16% 0.0%
2013 -1.92% 0.0%
2012 2.23% 0.0%
2011 5.88% 0.0%
2010 5.44% 0.0%

MBB had its best year in 2019 with an annual return of 6.27%. MBB’s worst year over the past decade yielded -1.92% and occurred in 2013. In most years the iShares MBS ETF provided moderate returns such as in 2012, 2017, and 2020 where annual returns amounted to 2.23%, 2.37%, and 4.03% 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

MBB vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
MBB $10,000 $11,554 3.08%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in MBB would have resulted in a final balance of $11,554. This is a profit of $1,554 over 5 years and amounts to a compound annual growth rate (CAGR) of 3.08%.

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%.

MBB’s CAGR is 52.37 percentage points lower than that of ARKK and as a result, would have yielded $53,664 less on a $10,000 investment. Thus, MBB performed worse than ARKK by 52.37% annually.


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