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MDY vs. ARKK: What’s The Difference?

The SPDR S&P MIDCAP 400 ETF Trust (MDY) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. MDY is a SPDR State Street Global Advisors Mid-Cap Blend fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between MDY and ARKK? And which fund is better?

The expense ratio of MDY is 0.52 percentage points lower than ARKK’s (0.23% vs. 0.75%). MDY also has a higher exposure to the industrials sector and a higher standard deviation. Overall, MDY has provided lower returns than ARKK over the past 5 years.

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

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Summary

MDYARKK
NameSPDR S&P MIDCAP 400 ETF TrustARK Innovation ETF
CategoryMid-Cap BlendMid-Cap Growth
IssuerSPDR State Street Global AdvisorsARK ETF Trust
AUM21.31B25.52B
Avg. Return13.29%55.45%
Div. Yield0.94%0.0%
Expense Ratio0.23%0.75%

The SPDR S&P MIDCAP 400 ETF Trust (MDY) is a Mid-Cap Blend fund that is issued by SPDR State Street Global Advisors. It currently has 21.31B total assets under management and has yielded an average annual return of 13.29% over the past 10 years. The fund has a dividend yield of 0.94% with an expense ratio of 0.23%.

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%.

MDY’s dividend yield is 0.94% higher than that of ARKK (0.94% vs. 0.0%). Also, MDY yielded on average 42.16% less per year over the past decade (13.29% vs. 55.45%). The expense ratio of MDY is 0.52 percentage points lower than ARKK’s (0.23% vs. 0.75%).

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Fund Composition

Industry Exposure

MDY vs. ARKK - Industry Exposure

MDYARKK
Technology14.74%30.5%
Industrials17.88%2.11%
Energy2.52%0.0%
Communication Services1.63%25.01%
Utilities2.84%0.0%
Healthcare11.17%29.47%
Consumer Defensive4.2%0.93%
Real Estate9.66%0.51%
Financial Services15.2%0.04%
Consumer Cyclical14.89%11.42%
Basic Materials5.27%0.0%

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has the most exposure to the Industrials sector at 17.88%. This is followed by Financial Services and Consumer Cyclical at 15.2% and 14.89% respectively. Energy (2.52%), Utilities (2.84%), and Consumer Defensive (4.2%) only make up 9.56% of the fund’s total assets.

MDY’s mid-section with moderate exposure is comprised of Basic Materials, Real Estate, Healthcare, Technology, and Consumer Cyclical stocks at 5.27%, 9.66%, 11.17%, 14.74%, and 14.89%.

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%.

MDY is 15.77% more exposed to the Industrials sector than ARKK (17.88% vs 2.11%). MDY’s exposure to Financial Services and Consumer Cyclical stocks is 15.16% higher and 3.47% higher respectively (15.2% vs. 0.04% and 14.89% vs. 11.42%). In total, Energy, Utilities, and Consumer Defensive also make up 8.63% more of the fund’s holdings compared to ARKK (9.56% vs. 0.93%).

Holdings

MDY - Holdings

MDY HoldingsWeight
Bio-Techne Corp0.75%
Molina Healthcare Inc0.63%
Cognex Corp0.63%
Fair Isaac Corp0.62%
XPO Logistics Inc0.61%
SolarEdge Technologies Inc0.61%
Signature Bank0.6%
Graco Inc0.55%
Camden Property Trust0.55%
FactSet Research Systems Inc0.54%

MDY’s Top Holdings are Bio-Techne Corp, Molina Healthcare Inc, Cognex Corp, Fair Isaac Corp, and XPO Logistics Inc at 0.75%, 0.63%, 0.63%, 0.62%, and 0.61%.

SolarEdge Technologies Inc (0.61%), Signature Bank (0.6%), and Graco Inc (0.55%) have a slightly smaller but still significant weight. Camden Property Trust and FactSet Research Systems Inc are also represented in the MDY’s holdings at 0.55% and 0.54%.

ARKK - Holdings

ARKK HoldingsWeight
Tesla Inc9.56%
Roku Inc Class A6.48%
Teladoc Health Inc5.76%
Square Inc A4.37%
Zoom Video Communications Inc4.36%
Shopify Inc A4.27%
Spotify Technology SA3.68%
Twilio Inc A3.66%
Coinbase Global Inc Ordinary Shares – Class A3.65%
Unity Software Inc Ordinary Shares3.41%

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

MDYARKK
Mean Return1.080
R-squared86.660
Std. Deviation16.830
Alpha-4.10
Beta1.150
Sharpe Ratio0.730
Treynor Ratio9.970

The SPDR S&P MIDCAP 400 ETF Trust (MDY) has a Sharpe Ratio of 0.73 with a Standard Deviation of 16.83 and a Beta of 1.15. Its R-squared is 86.66 while MDY’s Treynor Ratio is 9.97. Furthermore, the fund has a Mean Return of 1.08 and a Alpha of -4.1.

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

MDY’s Mean Return is 1.08 points higher than that of ARKK and its R-squared is 86.66 points higher. With a Standard Deviation of 16.83, MDY is slightly more volatile than ARKK. The Alpha and Beta of MDY are 4.10 points lower and 1.15 points higher than ARKK’s Alpha and Beta.

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Performance

Annual Returns

MDY vs. ARKK - Annual Returns

YearMDYARKK
202013.51%152.52%
201925.86%35.73%
2018-11.28%3.58%
201715.89%87.38%
201620.33%-1.96%
2015-2.4%3.76%
20149.42%0.0%
201333.08%0.0%
201217.58%0.0%
2011-1.99%0.0%
201026.17%0.0%

MDY had its best year in 2013 with an annual return of 33.08%. MDY’s worst year over the past decade yielded -11.28% and occurred in 2018. In most years the SPDR S&P MIDCAP 400 ETF Trust provided moderate returns such as in 2020, 2017, and 2012 where annual returns amounted to 13.51%, 15.89%, and 17.58% 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

MDY vs. ARKK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
MDY$10,000$17,67513.29%
ARKK$10,000$65,21855.45%

A $10,000 investment in MDY would have resulted in a final balance of $17,675. This is a profit of $7,675 over 5 years and amounts to a compound annual growth rate (CAGR) of 13.29%.

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%.

MDY’s CAGR is 42.16 percentage points lower than that of ARKK and as a result, would have yielded $47,543 less on a $10,000 investment. Thus, MDY performed worse than ARKK by 42.16% annually.


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