Cathie Wood’s revolutionary ARK Investment Management delivered a spectacular performance in the pandemic-stricken 2020. In fact, it has now grabbed a spot among the top 10 issuers in the $5.5-trillion ETF industry, per a BloombergQuint article.
Going by the data compiled by Bloomberg, ARK Investment Management now manages $41.5 billion in ETF products after seeing huge inflows in 2020, in comparison to WisdomTree’s $39.7 billion. Notably, ARK Investment Management grabbed the spot from WisdomTree among the top 10 issuers within the ETF industry (per a BloombergQuint article). Interestingly, ARK had under $3.5 billion in total assets in the year-ago period.
Commenting on ARK’s success Todd Rosenbluth, director of ETF research for CFRA Research stated, “in the first 25 years of the ETF industry, ETFs meant index products to most investors, and ARK has turned that on its head and highlighted that active management can exist and succeed,” as mentioned in a BloombergQuint article.
What’s Behind ARK’s Success?
If we look at the top-performing ARK ETFs, we will observe that large positions in Tesla (TSLA) and focus on companies gaining from ‘‘disruptive innovation’’ can be claimed as their recipe for success. Notably, ARK defines ‘‘disruptive innovation’’ as the introduction of a technologically-enabled new product or service that potentially changes the way the world works.
Amid the coronavirus pandemic, expanding digitization and heightening dependency on the Internet owing to some new normal trends like online shopping, work from home, digital payments, digitization of healthcare, growing favor for video gaming and many more have lent support to ARK’s investment strategy.
Cloud computing has emerged as a key technology and is keeping up with the growing work-from-home trend in the fight against coronavirus. It is supporting organizations in remotely processing a lot of information, developing and running key applications and services, and helping employees across the world collaborate while working.
Along with increased interest in online shopping, customers are also resorting to digital payments to clear bills. At the same time, merchants and utility providers are increasingly advocating the same.
The video game industry is seeing a boom as people are increasingly playing video games for some in-house entertainment, while maintaining social distancing amid the pandemic. Moreover, the boom in the video gaming space might continue in the post-pandemic era as well.
Going on, developments in genomics have been rapidly altering the healthcare landscape by decoding the mysteries behind the function, structure, evolution, editing and mapping of genomes. The global genomics market has been favored by solid developments in sequencing, microarray, polymerase chain reaction, nucleic acid extraction and purification techniques. Further, the implications of artificial intelligence, cloud-based technologies and increased R&D focus have lent a competitive edge to companies with significant exposure to genomics.
Top-Performing ARK ETFs
Here we highlight some ETFs from the house of ARK Investment Management that have appreciated more than 100% in the past year for our investors to consider:
ARK Genomic Revolution ETF ARKG — up 208.4% over the past year
This is an actively-managed ETF focusing on companies likely to benefit from the extension and enhancement of the quality of human and other life by incorporating technological and scientific developments, plus improvements and advancements in genomics into their business. Pacific Biosciences (PACB), Teladoc Health TDOC and CRISPR Therapeutics CRSP have spots among the top five holdings within the fund.
The fund holds 53 stocks in its basket. It charges 0.75% in expense ratio and has accumulated $9.44 billion in its asset base. The fund trades in an average three-month trading volume of 3.2 million shares (read: A Guide to Biotech ETF Investing Amid the Coronavirus Crisis).
ARK Innovation ETF ARKK — up 169.9%
This actively-managed fund includes those companies 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 (‘‘Genomic Revolution”), industrial innovation in energy, automation and manufacturing (‘‘Industrial Innovation’’), the increased use of shared technology, infrastructure and services (‘‘Next Generation Internet’), and technologies that make financial services more efficient (‘‘Fintech Innovation’’). No wonder that Tesla, Roku ROKU, CRISPR Therapeutics and Square SQ form its top four holdings.
ARKK holds 51 stocks in its basket. It charges 0.75% in expense ratio and has accumulated $21.04 billion in the asset base. The fund trades in an average three-month trading volume of 4.3 million shares (read: Top Performing ETF Areas of 2020).
ARK Next Generation Internet ETF ARKW — up 156.9%
Another actively-managed ETF includes companies that are focused on and anticipated to benefit from shifting the bases of technology infrastructure to the cloud, enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media. Tesla, Roku, Grayscale Bitcoin Trust GBTC and Square occupy positions in the top four spots.
ARKW holds 56 stocks in its basket. It charges 0.76% in expense ratio and has accumulated $5.86 billion in its asset base. The fund trades in an average three-month trading volume of 1.1 million shares (read: 5 Big ETF Stories of 2020 Worth Watching in 2021).
ARK Autonomous Technology & Robotics ETF ARKQ — up 119.4%
ARKQ is an actively managed ETF that is 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, and transportation. Tesla, here also, occupies the top spot.
ARKQ holds 43 stocks in its basket. It charges 0.75% in expense ratio and has accumulated $2.07 billion in its asset base. The fund trades in an average three-month trading volume of 588,000 shares (read: 5 ETFs Set to Soar on Teslas Robust Q4 Deliveries).
ARK Fintech Innovation ETF ARKF — up 102.9%
ARKF is again an actively-managed ETF that seeks to achieve its investment objective by investing under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Fintech innovation. Square, Zillow (Z) and PayPal Holdings PYPL occupy spots in the top 10 spots within the fund.
ARKF holds 47 stocks in its basket. It charges 0.75% in expense ratio and has accumulated $2.24 billion in its asset base. The fund trades in an average three-month trading volume of 1.2 million shares (read: 6 Best Active ETFs of 2020).
However, there are doubts whether or not ARK will be able to maintain the impressive performance this year as well. In this regard, Nate Geraci, president of investment-advisory firm the ETF Store in Kansas has said that “If the assumption is we’ll get an economic recovery as the Covid vaccine is deployed and things start getting back to normal, I would expect a rotation into value stocks, and the ARK strategies are clearly more growth-oriented. Expecting the same type of performance we saw in 2020 moving forward is unrealistic,” according to a BloombergQuint article.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Find us at the office
Exel- Frazzitta street no. 61, 44925 Kingston, Norfolk Island
Give us a ring
+23 274 947 142
Mon - Fri, 10:00-21:00