The iShares MSCI USA Min Vol Factor ETF (USMV) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. USMV is a iShares Large Blend fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between USMV and ARKK? And which fund is better?
The expense ratio of USMV is 0.60 percentage points lower than ARKK’s (0.15% vs. 0.75%). USMV also has a lower exposure to the technology sector and a lower standard deviation. Overall, USMV has provided lower returns than ARKK over the past 5 years.
In this article, we’ll compare USMV vs. ARKK. We’ll look at performance and industry exposure, as well as at their annual returns and fund composition. Moreover, I’ll also discuss USMV’s and ARKK’s holdings, risk metrics, and portfolio growth and examine how these affect their overall returns.
|Name||iShares MSCI USA Min Vol Factor ETF||ARK Innovation ETF|
|Category||Large Blend||Mid-Cap Growth|
|Issuer||iShares||ARK ETF Trust|
The iShares MSCI USA Min Vol Factor ETF (USMV) is a Large Blend fund that is issued by iShares. It currently has 27.6B total assets under management and has yielded an average annual return of 13.89% over the past 10 years. The fund has a dividend yield of 1.5% with an expense ratio of 0.15%.
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%.
USMV’s dividend yield is 1.50% higher than that of ARKK (1.5% vs. 0.0%). Also, USMV yielded on average 41.56% less per year over the past decade (13.89% vs. 55.45%). The expense ratio of USMV is 0.60 percentage points lower than ARKK’s (0.15% vs. 0.75%).
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The iShares MSCI USA Min Vol Factor ETF (USMV) has the most exposure to the Technology sector at 20.53%. This is followed by Healthcare and Consumer Defensive at 18.42% and 12.82% respectively. Basic Materials (1.65%), Real Estate (2.73%), and Consumer Cyclical (5.53%) only make up 9.91% of the fund’s total assets.
USMV’s mid-section with moderate exposure is comprised of Utilities, Financial Services, Industrials, Communication Services, and Consumer Defensive stocks at 6.93%, 9.65%, 10.51%, 11.03%, 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%.
USMV is 9.97% less exposed to the Technology sector than ARKK (20.53% vs 30.5%). USMV’s exposure to Healthcare and Consumer Defensive stocks is 11.05% lower and 11.89% higher respectively (18.42% vs. 29.47% and 12.82% vs. 0.93%). In total, Basic Materials, Real Estate, and Consumer Cyclical also make up 2.02% less of the fund’s holdings compared to ARKK (9.91% vs. 11.93%).
|Eli Lilly and Co||1.64%|
|T-Mobile US Inc||1.51%|
|Accenture PLC Class A||1.51%|
|Visa Inc Class A||1.49%|
|Waste Management Inc||1.45%|
|The Kroger Co||1.44%|
|Johnson & Johnson||1.42%|
|Gilead Sciences Inc||1.42%|
USMV’s Top Holdings are Eli Lilly and Co, Microsoft Corp, T-Mobile US Inc, Accenture PLC Class A, and Visa Inc Class A at 1.64%, 1.62%, 1.51%, 1.51%, and 1.49%.
Waste Management Inc (1.45%), Adobe Inc (1.45%), and The Kroger Co (1.44%) have a slightly smaller but still significant weight. Johnson & Johnson and Gilead Sciences Inc are also represented in the USMV’s holdings at 1.42% and 1.42%.
|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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The iShares MSCI USA Min Vol Factor ETF (USMV) has a Alpha of 0 with a Sharpe Ratio of 0 and a Beta of 0. Its Standard Deviation is 0 while USMV’s Mean Return is 0. Furthermore, the fund has a Treynor Ratio of 0 and a R-squared of 0.
The ARK Innovation ETF (ARKK) has a R-squared of 0 with a Sharpe Ratio of 0 and a Standard Deviation of 0. Its Alpha is 0 while ARKK’s Treynor Ratio is 0. Furthermore, the fund has a Mean Return of 0 and a Beta of 0.
USMV’s Mean Return is 0.00 points lower than that of ARKK and its R-squared is 0.00 points lower. With a Standard Deviation of 0, USMV is slightly less volatile than ARKK. The Alpha and Beta of USMV are 0.00 points lower and 0.00 points lower than ARKK’s Alpha and Beta.
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USMV had its best year in 2019 with an annual return of 27.77%. USMV’s worst year over the past decade yielded 0.0% and occurred in 2011. In most years the iShares MSCI USA Min Vol Factor ETF provided moderate returns such as in 2020, 2016, and 2012 where annual returns amounted to 5.6%, 10.5%, and 11.04% 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.
|Fund||Initial Balance||Final Balance||CAGR|
A $10,000 investment in USMV would have resulted in a final balance of $17,978. This is a profit of $7,978 over 5 years and amounts to a compound annual growth rate (CAGR) of 13.89%.
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%.
USMV’s CAGR is 41.56 percentage points lower than that of ARKK and as a result, would have yielded $47,240 less on a $10,000 investment. Thus, USMV performed worse than ARKK by 41.56% annually.
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