Catherine Wood’s ARK Innovation ETF: What makes it a unique investment opportunity in the US stock market?

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September 22, 2021 5:26 PM

The fund aims to capture long-term growth with the low correlation of relative returns to traditional growth strategies and negative correlation to value strategies.

Catherine Wood ARK Innovation ETF, stock, price, review, performance, ticker, investment opportunity, US stock market,ARKK comes with an opportunity for investors to take exposure in companies leading the innovation.

One of the hottest of all US exchange-traded funds is the Catherine Wood-led ARK Innovation ETF (ticker ARKK). The flagship ETF of the Ark Investment Management with close to $25.52 billion in AUM is listed on the NYSE Arca Stock Exchange. The fund is known to have taken some long-term tech bets in its portfolio. In 2020, ARKK had gained over 150 per cent while the 5-year annualized return has been over 40 percent for the fund. Currently, ARKK is quoted at around $117.14, up by 0.86 percent over the previous close. As per ARKK’s product note, the fund is focused on ARK’s belief that innovation is key to growth. The ARK Innovation ETF is built on the cornerstone investments that present the best risk-reward opportunities from ARK’s innovation-based themes.

ARKK Fund

ARKK is an actively managed Exchange Traded Fund (ETF) that seeks long-term growth of capital. It seeks to achieve this investment objective by investing under normal circumstances primarily (at least 65% of its assets) in domestic and foreign equity securities of companies that are relevant to ARKK’s investment theme of disruptive innovation. ARK defines ‘‘disruptive innovation’’ as the introduction of a technologically enabled new product or service that potentially changes the way the world works.

Industry Exposure

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, industrial innovation in energy, automation and manufacturing, the increased use of shared technology, infrastructure and services, and technologies that make financial services more efficient.

Fund Facts

  • Expense Ratio: 0.75%
  • Number of Holdings: 35-55
  • Portfolio Manager: Catherine D. Wood

As far as the market capitalization of companies is concerned, the ARKK has nearly 80 per cent in mega-caps ($100B+) and Large caps ($10 – $100B) companies. Information Technology, Health Care and Communication Services occupies almost 80 per cent of the fund’s assets. As of June 30, 2021, the top 10 holdings included: Tesla, Roku, Teladoc Health, Square, Zoom Video Communications, Shopify, Twilio, Coinbase Global, Spotify Technology, Unity Software ARKK comes with an opportunity for investors to take exposure in companies leading the innovation.

The fund aims to capture long-term growth with the low correlation of relative returns to traditional growth strategies and negative correlation to value strategies. ARKK provides a lower-cost alternative to mutual funds with true active management in an Exchange-Traded Fund that invests in rapidly moving themes. As against traditional indices, it can be a complement to traditional value or growth strategies. Before looking to invest in ARKK, know that it might not be the typical equity fund as the risk reward could be slightly higher than other funds.

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