Ark Investment Management founder Cathie Wood has been seeing massive money flowing into five of the seven ETFs lineup in the recent months.
Ark Innovation ETF
ARKK
, which is the second top asset creator of this year, is red hot, just behind Vanguard S&P 500 ETF
VOO
. The ETF has pulled in about
$5.3 billion
in capital so far this year, bringing its total AUM to $28 billion (read:
6 Hot ETFs That Could be Investors’ Darling in February
).
ARKK in Focus
It is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related 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).
In total, the fund holds 55 securities in its basket with none of them accounting for more than 9% share. Healthcare and information technology take the largest share at 31.5% and 29%, respectively while communication services and consumer discretionary round off the next two spots. The fund charges 75 bps in annual fees and trades in an average daily volume of 6.2 million shares.
What’s Behind the Popularity?
The popularity has been driven by its “innovative strategy” that took flight amid the pandemic, which changed the consumer landscape and business trends all over the world. The ETF is centered around the idea of “disruptive innovation,” which is defined as the introduction of a technologically-enabled new product or service that potentially changes the way the world works (read:
Ark Invest ETFs Power Active Investing Growth
).
Additionally, the bullish bets on Tesla
TSLA
and the crazy run of bitcoin continued to drive investors’ interest in ARKK. The bitcoin, the largest cryptocurrency, topped $51,000 for the first time ever and is up 73% so far this year. ARK believes bitcoin’s rapid growth has positioned it for an allocation in investment portfolios. Last week, Tesla announced its plan to begin accepting the cryptocurrency as a form of payment in the near future.
Further, electric vehicles (EVs) are at the forefront of the disruptive innovation that ARK believes to accelerate significantly. “EVs are approaching sticker price parity with gas powered cars. Leaders in the EV market are developing innovative battery designs to enable longer range vehicles at lower costs.” According to ARK, Tesla is three to four years ahead of all autonomous electrical vehicle competitors and is on track to launch its own ride-sharing app. ARK’s research suggests that autonomous ride-hailing platforms will generate more than $1 trillion in profits per year by 2030 in its latest “
Big Ideas
” for 2021 release (read:
Guide to Electric Vehicle ETFs
).
Given the bullish backdrop, ARKK soared about 22% so far this year after an impressive rally of more than 150% in 2020. Though most of the stocks in the fund’s portfolio have delivered astounding returns midway through Q1, a few were the real stars. Below we have highlighted the five best-performing stocks:
Best-Performing Stocks of ARKK
Stratasys Ltd.
SSYS
:
This company is a manufacturer of in-office rapid prototyping (RP) and manufacturing systems and 3D printers for automotive, aerospace, defense, electronic, medical, education and consumer product original equipment manufacturers (OEMs). The stock makes up for 1.2% in the fund’s basket. Stratasys has surged about 134% so far this year and has a Zacks Rank #3 (Hold).
Pacific Biosciences of California Inc.
PACB
:
This company develops, manufactures and markets sequencing systems, which help in studying synthesis, composition, structure and regulation of deoxyribonucleic acid, popularly known as DNA. It has gained more than 70% in the same timeframe. The stock makes up for 1.1% share in PACB. It carries a Zacks Rank #4 (Sell).
HUYA Inc. Sponsored ADR
HUYA
:
This company offers interactive video broadcast service which includes e-sports, music, reality show and more. The stock makes up for 0.8% allocation in the fund’s portfolio and has also delivered incredible returns of about 59% in the same time frame. The stock has a Zacks Rank #4.
Veracyte Inc.
VCYT
:
This diagnostics company is focused on discovering, developing and commercializing molecular cytology solutions. It makes up for 1.3% of the assets in ARKK and has gained about 51% so far this year. The stock has a Zacks Rank #3 (read:
5 ETFs That Deserve a Place in Your Portfolio
).
Teladoc Health Inc.
TDOC
:
This company provides virtual healthcare services on a business-to-business basis in the United States and internationally. The stock has surged nearly 44% in the same time frame. It currently carries a Zacks Rank #3 and takes the third spot in the fund’s basket, accounting for 5.2% of the total assets.
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