XLE vs. ARKK: What’s The Difference?

The Energy Select Sector SPDR Fund (XLE) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. XLE is a SPDR State Street Global Advisors Equity Energy fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between XLE and ARKK? And which fund is better?

The expense ratio of XLE is 0.63 percentage points lower than ARKK’s (0.12% vs. 0.75%). XLE also has a higher exposure to the energy sector and a higher standard deviation. Overall, XLE has provided lower returns than ARKK over the past 5 years.

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

Summary

XLE ARKK
Name Energy Select Sector SPDR Fund ARK Innovation ETF
Category Equity Energy Mid-Cap Growth
Issuer SPDR State Street Global Advisors ARK ETF Trust
AUM 25.55B 25.52B
Avg. Return 1.28% 55.45%
Div. Yield 3.92% 0.0%
Expense Ratio 0.12% 0.75%

The Energy Select Sector SPDR Fund (XLE) is a Equity Energy fund that is issued by SPDR State Street Global Advisors. It currently has 25.55B total assets under management and has yielded an average annual return of 1.28% over the past 10 years. The fund has a dividend yield of 3.92% with an expense ratio of 0.12%.

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%.

XLE’s dividend yield is 3.92% higher than that of ARKK (3.92% vs. 0.0%). Also, XLE yielded on average 54.17% less per year over the past decade (1.28% vs. 55.45%). The expense ratio of XLE is 0.63 percentage points lower than ARKK’s (0.12% vs. 0.75%).

Fund Composition

Industry Exposure

XLE vs. ARKK - Industry Exposure

XLE ARKK
Technology 0.0% 30.5%
Industrials 0.0% 2.11%
Energy 100.0% 0.0%
Communication Services 0.0% 25.01%
Utilities 0.0% 0.0%
Healthcare 0.0% 29.47%
Consumer Defensive 0.0% 0.93%
Real Estate 0.0% 0.51%
Financial Services 0.0% 0.04%
Consumer Cyclical 0.0% 11.42%
Basic Materials 0.0% 0.0%

The Energy Select Sector SPDR Fund (XLE) has the most exposure to the Energy sector at 100.0%. This is followed by Technology and Industrials at 0.0% and 0.0% respectively. Consumer Cyclical (0.0%), Financial Services (0.0%), and Real Estate (0.0%) only make up 0.00% of the fund’s total assets.

XLE’s mid-section with moderate exposure is comprised of Consumer Defensive, Healthcare, Utilities, Communication Services, and Industrials stocks at 0.0%, 0.0%, 0.0%, 0.0%, and 0.0%.

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%.

XLE is 100.00% more exposed to the Energy sector than ARKK (100.0% vs 0.0%). XLE’s exposure to Technology and Industrials stocks is 30.50% lower and 2.11% lower respectively (0.0% vs. 30.5% and 0.0% vs. 2.11%). In total, Consumer Cyclical, Financial Services, and Real Estate also make up 11.97% less of the fund’s holdings compared to ARKK (0.00% vs. 11.97%).

Holdings

XLE - Holdings

XLE Holdings Weight
Exxon Mobil Corp 23.7%
Chevron Corp 20.03%
ConocoPhillips 4.64%
EOG Resources Inc 4.46%
Schlumberger Ltd 4.43%
Marathon Petroleum Corp 4.17%
Pioneer Natural Resources Co 4.08%
Phillips 66 4.07%
Kinder Morgan Inc Class P 3.85%
Williams Companies Inc 3.5%

XLE’s Top Holdings are Exxon Mobil Corp, Chevron Corp, ConocoPhillips, EOG Resources Inc, and Schlumberger Ltd at 23.7%, 20.03%, 4.64%, 4.46%, and 4.43%.

Marathon Petroleum Corp (4.17%), Pioneer Natural Resources Co (4.08%), and Phillips 66 (4.07%) have a slightly smaller but still significant weight. Kinder Morgan Inc Class P and Williams Companies Inc are also represented in the XLE’s holdings at 3.85% and 3.5%.

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

XLE ARKK
Mean Return 0.32 0
R-squared 61.84 0
Std. Deviation 27.52 0
Alpha -11.98 0
Beta 1.54 0
Sharpe Ratio 0.12 0
Treynor Ratio -0.4 0

The Energy Select Sector SPDR Fund (XLE) has a Standard Deviation of 27.52 with a Mean Return of 0.32 and a Alpha of -11.98. Its Treynor Ratio is -0.4 while XLE’s Sharpe Ratio is 0.12. Furthermore, the fund has a R-squared of 61.84 and a Beta of 1.54.

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

XLE’s Mean Return is 0.32 points higher than that of ARKK and its R-squared is 61.84 points higher. With a Standard Deviation of 27.52, XLE is slightly more volatile than ARKK. The Alpha and Beta of XLE are 11.98 points lower and 1.54 points higher than ARKK’s Alpha and Beta.

Performance

Annual Returns

XLE vs. ARKK - Annual Returns

Year XLE ARKK
2020 -32.56% 152.52%
2019 11.87% 35.73%
2018 -18.1% 3.58%
2017 -1.01% 87.38%
2016 27.95% -1.96%
2015 -21.47% 3.76%
2014 -8.61% 0.0%
2013 26.16% 0.0%
2012 5.17% 0.0%
2011 2.98% 0.0%
2010 21.7% 0.0%

XLE had its best year in 2016 with an annual return of 27.95%. XLE’s worst year over the past decade yielded -32.56% and occurred in 2020. In most years the Energy Select Sector SPDR Fund provided moderate returns such as in 2017, 2011, and 2012 where annual returns amounted to -1.01%, 2.98%, and 5.17% 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

XLE vs. ARKK - Portfolio Growth

Fund Initial Balance Final Balance CAGR
XLE $10,000 $7,826 1.28%
ARKK $10,000 $65,218 55.45%

A $10,000 investment in XLE would have resulted in a final balance of $7,826. This is a profit of $-2,174 over 5 years and amounts to a compound annual growth rate (CAGR) of 1.28%.

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%.

XLE’s CAGR is 54.17 percentage points lower than that of ARKK and as a result, would have yielded $57,392 less on a $10,000 investment. Thus, XLE performed worse than ARKK by 54.17% annually.


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