You are currently viewing ARKK vs ARKW: Which ARK Invest ETF Is Better?

ARKK vs ARKW: Which ARK Invest ETF Is Better?

  • Reading time:14 mins read

In this article, we’ll compare ARKK vs ARKW:

ARK Innovation ETF (ARKK) vs ARK Next Generation Internet ETF (ARKW).

Both Exchange Traded Funds (ETFs) are popular investments for different reasons.

This article will help you decide between ARKK vs ARKW.

ARKK vs ARKW Graphic

 

ARKK vs ARKW

The primary difference between ARKK and ARKW is the fund’s investment goals.  ARKK has an investment goal to track disruptive innovation.  ARKW tracks companies that will benefit from the next generation of the internet.

Another difference is their expense ratio.  ARKK has an expense ratio of 0.75% while ARKW has an expense ratio of 0.83%.

This makes both ARKK and ARKW expensive ETFs for investors.  Investors can expect actively managed funds to be more expensive compared to passively managed funds.

This is ARKK and ARKW holdings side by side:

ARKK vs ARKW Holdings

ARKK’s holdings include a higher percentage of Tesla, Roku, and Teladoc.

ARKW’s holdings include a higher percentage of Coinbase, Grayscale, Twilio.

Both ARKK and ARKW are actively managed.  This means ARK Invest has fund managers actively seeking to beat the market with both of these funds.

This means that a fund manager (Cathie Wood) at ARK Invest is actively trying to beat the market.

ARKK

  • Actively Managed Fund
  • Expense Ratio 0.75%
  • Offered By ARK Invest
  • Holds Between 35 – 55 Stocks

ARKW

  • Actively Managed Fund
  • Expense Ratio: 0.83%
  • Offered By ARK Invest
  • Holds 44 stocks

 

ARKK vs ARKW Performance

ARKK and ARKW have had different performances over the last 5 years.  ARKW is beating ARKK by 4% annually.

Over the last 3 years, ARKW is beating ARKK by 5% per year.

Performance Comparison:ARKK vs ARKW Performance Comparison

As you can see from the chart, ARKW is slightly outperforming ARKK over the longer term.

In the short term, both ETFs perform similarly.

ARKK vs ARKW Performance Chart

Similarities Between ARKK and ARKW:

  • Both Are Exchange-Traded Funds (ETFs)
  • ARK Invest Funds
  • Similar Performance Over The Last Year
  • Both Focus On Growth Companies
  • Actively Managed ETFs
  • Similar Number Of Holdings

 

ARKK and ARKW Differences

The main difference between ARKK and ARKW is the way the fund is managed.  ARKK seeks to track companies with disruptive innovation.  ARKW seeks to track companies that will benefit from the next generation of the internet.

Their performance is also different with ARKW outperforming ARKK by 4% annually over the last 5 years.

Lastly, ARKK and ARKW have different expense ratios.  ARKK has an expense ratio of 0.75% while ARKW has an expense ratio of 0.83%.

That makes ARKK more expensive compared to ARKW.

However, both funds can be considered expensive ETFs.

Differences Between ARKK and ARKW:

  • Investing Goals Of The Fund (Disruptive Innovation vs Next Gen Internet)
  • Expense Ratio (0.75% vs 0.83%)
  • Performance Returns (ARKW Performed Better Long Term)

 

ARKK Profile

  • Fund Inception: 2014
  • Expense Ratio: 0.75%
  • Number Of Stocks: 35 – 55
  • Actively Managed

ARK Innovation ETF (ARKK) is an actively managed ETF that looks for performance returns from companies with disruptive innovation.

They define disruptive innovation as new technology that changes the way the world works.

The fund has $19.4 billion in assets under management.

ARKK was created in 2014 and currently has an expense ratio of 0.75%.  This makes ARKK an expensive ETF compared to similar ETFs like Vanguards VGT.

Example:

Here is what a 0.65% fee (difference between ARKK and VGT) will cost over 30 years.  Assuming you start with an initial investment of $100,000 and contribute $10,000 each year, over 30 years.

You will have $500,000 less in your account.

This does not include costs to buy and sell your shares.

 

ARKK Performance

ARK Invest’s ARKK has underperformed over the last year with a return of -50%.

ARKK Performance Chart

 

While ARKK has a negative 50% return, the S&P 500 has a positive return of 18%.

 

ARKK Holdings

ARKK Top Holdings

 

ARKK’s top 10 holdings include Tesla, Teladoc, Roku, Zoom, and Coinbase.  The ETF invests in companies that are in high-growth technology.

The top 10 holdings make up over 50% of the portfolio which means you can expect higher volatility with ARKK compared to more diversified funds like Vanguard Total Stock Market Index Fund ETF (VTI).

 

ARKW Profile

  • Fund Inception: 2014
  • Expense Ratio: 0.83%
  • Number Of Stocks: 44
  • Top 10 Holdings: 55%

ARK Next Generation Internet ETF (ARKW) is an actively managed ETF that looks for performance returns from companies in the next generation of the internet industry.

They define this as companies that will benefit from the shift to new technologies of the internet such as Cloud Computing & Cyber Security, Social Platforms, and Blockchain & P2P.

The fund has $3.7 billion in assets under management.

 

ARKW Performance

The chart below is the returns for ARKW vs the S&P 500 index:ARKW vs S&P 500 Performance Chart

ARKW (Yellow)          S&P 500 (Green)

You can see that ARKW (Yellow) has underperformed the S&P 500 (Green) year to date.

However, be mindful that this does not guarantee that these returns will continue to look the same over the long term.

 

ARKW Holdings

Here are the top 10 holdings for ARK Next Generation Internet ETF (ARKW):

ARKW Top Holdings

The fund has $3.7 billion in total net assets.

ARKW is largely made up of Coinbase, Tesla, Grayscale Bitcoin Trust, Roku, and Zoom.  ARKW provides exposure to over 40 stocks.

However, with the top 10 holdings making up more than 50% of the portfolio, it isn’t very diversified compared to other ETFs such as Vanguard Total Stock Market Index Fund ETF (VTI).

 

How To Invest In ARKK and ARKW

The easiest way to invest in ARKK and ARKW commission-free is with M1 Finance.  (Use this link for $50 when you open a new account)

M1 Finance gives you the option to invest in both options completely free.  This is important because as we saw in our earlier example, fees can affect long-term returns.

You can still invest in ARKK and ARKW using other platforms but there will likely be a charge when buying and selling shares.

I like M1 Finance as the best option because it gives you the flexibility to purchase ARKK, ARKW, and thousands of other stocks.

M1 Finance also lets you purchase fractional shares.

This is great for buying stocks or ETFs with high share prices.

I also use Personal Capital to track my investment fees. They have a free Retirement Fee Analyzer that tells you the future impact of fees on your portfolio.

Personal Capital Retirement Fee Analyzer

Personal Capital’s free tools allow you to easily find which of your investments has high fees so that you can switch them to low-cost options.  (Get a $20 Amazon Gift Card with this link when you add at least one investment account containing a balance of more than $1,000 within 30 days)

 

Which Is Better ARKK or ARKW?

ARKK and ARKW are similar investments.  ARKK has a lower expense ratio of 0.75% but has not performed as well as ARKW over the last 5 years.

Both ARKK and ARKW have performed poorly compared to similar low-cost ETFs.

If I have to choose between ARKK vs ARKW I would choose ARKK because of the lower expense ratio.

However, I would much rather prefer passively managed, low-cost ETFs, that have a history of strong performance.

Some examples of passively managed, low-cost growth ETFs are:

Vanguard’s VGT offers many of the same features as ARKK but at a much lower expense ratio of 0.1%.

Out of these funds, I prefer VGT because of the lower expense ratio.

Investors in ETFs like VUG or VGT have had better returns and at a lower cost!

This would suggest yet again that passive management is better than actively managed funds.

Keep in mind, past performance does not predict future returns.

I would choose VGT, VUG, or MGK over ARKK or ARKW and I would purchase the shares commission-free using M1 Finance.

That way I keep my costs as low as possible.

Related Posts:

 

Is ARKK or ARKW Better for Financial Independence?

The FIRE community is big on keeping investment costs low and we are a big fan of Vanguard.  However, ARKK and ARKW are both ARK Invest ETFs with high expense ratios.

Therefore, I wouldn’t consider these ETFs for financial independence.

Here are more ETF’s I would prefer with low expense ratios and similar performances:

They all have similar returns and are at a lower cost compared to ARKK and ARKW.

Also, if financial independence is your goal I would suggest looking into other funds that give you more diversification like VTSAX.

 

My Winner: Neither

I wouldn’t call ARKK or ARKW winners.  They have both underperformed compared to passively managed index funds.

They are also as much as 7 times more expensive compared to similar ETFs.

I always lean towards keeping costs as low as possible and therefore ARKK or ARKW would not be in any of my portfolios.

I prefer passively managed ETFs like the ones offered from Vanguard or Fidelity.

Remember: Returns Are Not Guaranteed But Fees Are!

If you like ETF comparisons like these check out more in our related posts below.

 


Disclaimer
This post may have affiliate links, which means I may receive commissions if you choose to purchase through links I provide (at no extra cost to you). Thank you for supporting the work I put into this site!

This information is my opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.