After a rough September, October’s trading has shown some bullishness. A major topic of discussion among investors is the apparent disconnect between the stock market and the real economy. The markets have shown huge volatility in recent sessions, with the elections and stimulus hopes playing a pivotal role. However, the COVID-19 pandemic really shed a light on…
the importance of having exposure to disruptive innovation that is likely to change the world and the ways we live our lives far into the future.
As the last quarter of the year has already begun, it’s perhaps the right time to start shortlisting stocks or ETFs for the coming year. According to the Wharton School professor Jeremy Siegel, the stock market is likely primed for strong gains next year, regardless of who occupies the White House. However, investing in individual stocks in the near term could be risky. Exchange traded funds (ETFs) help you mitigate this risk as they hold a broad and diversified exposure at minimal operating costs.
ARK Innovation ETF (ARKK)
ARKK is an actively managed fund that targets companies poised to benefit from disruptive innovation. The fund combines the strategies of three other thematic funds issued by ARK – genomic revolution, industrial innovation, and Web x.0. The investment objective of ARKK is long-term capital growth. It invests primarily in domestic and foreign equity securities, both in developed and emerging markets.
The ETF is uniquely designed and thus tracks no underlying index. However, the fund seeks to beat the MSCI ACWI + Frontier Markets IMI Index. The ETF has an MSCI ESG Fund Rating of BBB based on a score of 5.57 out of 10.
ARKK is weighted across different disruptive innovation elements such as a 10.1% weighting in cloud computing, followed by 9.8% and 9.4% exposure to e-commerce and molecular diagnostics, respectively. In terms of sector exposure, the portfolio is heavily inclined towards healthcare and information technology names. The fund typically holds 35 to 50 companies in total with an average market capitalization of $76.3 billion. The top 3 holdings in the fund are Tesla Inc (TSLA), Invitae Corp (NVTA), and Square Inc (SQ), with the weights of 11%, 8.8%, and 6.4%, respectively.
The ETF paid an annual dividend of $0.38 last year, which translates into a dividend yield of 0.38%. ARKK has AUM of $10.7 billion and an expense ratio of 0.75%. Financial advisors who believe that indexing always wins over actively managed portfolios may want to re-think that belief. The ETF has witnessed a massive net inflow of $4.4 billion over the past six months.
ARKK closed yesterday’s trading session at $97.95 with a year-to-date gain of 95.7%. The ETF has recently hit its 52-week high $105.20 and is up more than 84.6% over the last six months.
How does ARKK stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Industry Rank
B for Overall POWR Rating.
It is ranked #1 out of 95 ETFs in the Technology Equities ETFs group.
ARK Genomic Revolution ETF (ARKG)
ARKG is an actively-managed fund that targets companies involved in the genomics industry. The ETF reaches across multiple sectors and geographies for companies that are best positioned to profit from advancements in energy, automation, manufacturing, materials and transportation. The fund invests in companies such as those that develop, produce or enable targeted therapeutics, bioinformatics, stem cells or molecular diagnostics. ARKG has an MSCI ESG Fund Rating of B based on a score of 2.56 out of 10. The ETF is uniquely designed and thus tracks no underlying index.
96% of the ETF’s holdings are in US healthcare-related companies, with biotech naturally leading the way, with over a 67% weighting. The ETF has a thematic exposure of 23.5%, 17% and 13.7% to molecular diagnostics, beyond DNA and gene therapy, respectively. The top 3 out of 34 holdings of the fund are…
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