Mutual funds, low-csot index funds, and exchange traded funds should be a staple for any serious investor’s portfolio. Both are safer investments than any individual stock and can offer diversification. You can spend hours or days sifting through hundreds if not thousands of different funds. Or, you can go with two innovative funds such as ARKK vs ARKQ.
While some ETF’s aim to follow an index like the S&P 500 or Dow Jones Industrial Average, ARKK and ARKQ are both actively managed. Both were created back in 2014 and aimed to focus on very different types of companies than typical mutual funds might.
AARK’s description from it’s issuers website states:
Companies within ARKK include those that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of:
- DNA Technologies
- Artificial Intelligence
- FinTech Technology
AARQ’S description is also quite unique:
Companies within ARKQ are focused on and are expected to substantially benefit from the development of new products or services, technological improvements, and advancements in scientific research related to, among other things, energy, automation and manufacturing, materials, artificial intelligence, and transportation. These companies may develop, produce, or enable:
- Autonomous Transportation
- Robotics and Automation
- 3D Printing
- Energy Storage
- Space Exploration
So how have these funds faired, and how do they stack up against each other, lets takek a look.
ARKK vs ARKQ: Issuer
When it comes to ARKK vs ARKQ from an issuer standpoint, you’re dealing with only one firm, Ark Invest.
Ark Invest’s main objective is to invest in “disruptive” innovation. Or in other words, companies that are trying to change the norms when it comes to technology.
Ark does not have the same track record as some of your larger issues such as Vanguard or SSGA. Ark was founded in 2014 by Catherine D. Wood. Wood has over 40 years of experience in investing in new technology. ARKK and ARKQ are just two many ETF’s managed by ARK focused on different cutting-edge technologies.
ARKK vs ARKQ: Underlying Index Followed
As mentioned early, some ETFs aim to follow an index like the S&P500 market index, SPY for example. The S&P 500 aims to track the 500 leading publicly traded US companies. Market cap is the primary criterion for a company to be included in the S&P 500 index fund, but it is not the only criterion.
ARKK vs ARKQ: Expense Ratios
Expense ratios can be a vital piece of information when deciding what fund to invest in. Even a small difference can become thousands of dollars over the course of investing in a fund for 10 or 20 years.
Essentially, with managed funds, there are expenses that go along with it. These expenses could be salaries to pay analysts or portfolio managers, management fees, rent for office space, and many others. Many funds will pass some or all of these expenses on to you, the investor. The amount that will be passed to you is shown as the expense ratio.
Since they are both from the same issuer, it should come as no surprise that both ARKK vs ARKQ have the same expense ratio. Both ARKK and ARKQ have an expense ratio of .75%.
Typically, actively managed funds have much higher expense ratios than index funds. You can find expense ratios as low as .03 percent with certain index funds, so the difference you’ll be paying in fees with ARKK and ARKQ is significant and should be taken into consideration.
However, if you are simply comparing ARKK vs ARKQ, there is no difference.
ARKK vs ARKQ: Minimum Initial Investments
Minimum initial investments (MII) will vary per fund and firm. The minimum initial investment only applies the first time you invest in a fund. Many funds require anywhere from $100 – $5000 or more for your first investment. After that, you are free to invest any amount you wish on subsequent investments with the same fund.
As expected ARKK vs ARKQ from a minimum initial investment standpoint is exactly the same. According to Ark’s website, “Generally, there is no minimum investment size for the ARK ETFs”
ARKK vs ARKQ: Net Assets and Holdings
When looking at actual assets under management, you’ll find a bit of difference in ARKK vs ARKQ. ARKK holds just under 9 billion in assets while ARKQ holds just over 1 billion in assets. Since both funds are technology focus you might think you’d find similar funds help, but as mentioned in their descriptions they focus are different technologies.
ARKK Top 10 Holdings
ARKQ Top 10 Holdings
As you can see, with the exception of Tesla, ARKK vs ARKQ from a holdings standpoint is quite different.
ARKK vs ARKQ: Compositions
Both ARKK and ARKQ hold a relatively low number of stocks when compared to larger ETF’s. ARKK typically holds 30-50 stocks while ARKQ will hold a bit more with 35-55 stocks.
Due to their low number of stocks, either could see alot of volatility based on the technology sector or market conditions as a whole.
ARKK vs ARKQ: Overall Performance
Of course, what most investors will put at the top of their criteria when determining which fund to invest in will be performance! See below for ARKK vs ARKQ in overall performance.
When it comes to performance ARKK vs ARKQ is easy to see a clear winning so far. ARKQ showed more growth in the 3-year, 5-year, and beyond data points. ARKQ also dropped much less than ARKK during this past year, when basically every stock has plummeted.
ARKK vs ARKQ: Which is better?
Before investing in any stock, mutual-fund, or anything else, it’s always a good idea to do your research. Whether it will be a short term investment or long term investment, you can never have too much information.
When making any investment, it comes down to what you are comfortable with and your investment strategy. The biggest factors in ARKK vs ARKQ really come down to performance and the types of companies they invest in.
Despite a tough 2022 for both funds, for the time being, ARKQ has outperformed ARKK. However, both of these funds will continue to invest in cutting-edge technologies and with the low number of total stocks in each one, one company could make a huge difference down the road.
ARKK vs ARKQ: Final Thoughts
ARKK vs ARKQ are two very similar funds. Most of their aspects such as issues, expense ratio, and minimum initial investments are exactly the same. For now, performance\returns gives ARKQ an edge, but with a maximum of 50-55 individual stocks in either fund at a time, neither is overly diversified, and this could easily swing in ARKK’s favor down the road.
When looking at which fund to invest in, I’d take a look at the types of technologies each is focused on. Whichever you believe will have more of an impact in the future, is the fund I would invest my money with.