ARK Investment Management, a New York-based money manager that emphasizes thematic investing in an effort to unearth companies with the potential to reshape industries, rolled its first two actively managed exchange traded funds Tuesday.
The ARK Industrial Innovation ETF (NYSEArca: ARKQ) and the ARK Web x.0 ETF (NYSEArca: ARKW) are Ark’s first two ETF offerings and while the names of these new funds may imply they are just run of the mill of industrial and Internet sector ETFs, the opposite is actually true.
ARK “is rooted in over thirty years of experience in identifying and investing in disruptive innovations that enable outsized growth as industries transform. Through its open-source research process, ARK is able to identify companies that we believe are leading and benefiting from disruptive cross-sector forces and changing how the world works,” according to a statement issued by the firm.
That is to say the ARK Industrial Innovation ETF is not your typical industrial sector ETF, so do not bet on finding large weights to old-line industrial stocks such as Dow components Boeing (NYSE: BA) and General Electric (NYSE: GE) in this ETF. Rather, ARKQ gives investors an avenue for tapping into companies that are driving a true 21st century industrial renaissance.
That means the new ETF holds companies involved in robotics, the production of self-driving vehicles, alternative energy solutions, energy storage and even 3D printing. [An ETF for 3D Printing Stocks]
ARKQ turns the idea of the industrial ETF on its head by featuring Google (NasdaqGS: GOOGL), Tesla (NasdaqGS: TSLA), Intuitive Surgical (NasdaqGS: ISRG) and 3D printing firm Stratasys (NasdaqGS: SSYS). Among its top-10 holdings. Despite its exponential, broad market benchmark indices have been slow to afford much more than token weights to Elon Musk’s, but ARKQ becomes one of a small number of ETFs to feature the stock among its top-10 holdings. [Tesla Lifts These ETFs]
The ARK’s Web x.0 ETF “invests in companies that are transforming every sector of the economy, thanks to Internet enabled innovation. These changes cut across sectors and are accelerating thanks to social, mobile, and local technological breakthroughs, which are transforming consumer and business behavior,” according to the statement.
With ARKW, investors gain exposure to cloud computing firm, the rising cryptocurrency phenomenon, social media, the Internet of things and wearable technology, among other new wave technology trends.
ARKW’s top-10 lineup features familiar names such as Apple (NasdaqGS: AAPL), Facebook (NasdaqGS: FB), Twitter (NYSE: TWTR), LinkedIn (NYSE: LNKD) and Charles Schwab. ARKW’s have a weighted average market cap of $80 billion and a median market value of $13 billion, according to Ark data.
The two new ETFs charge 0.95%, which is pricey in the ETF world, but inexpensive when considering a comparable thematic mutual fund is likely to charge 1.5% to 2% per year.
Increased demand for the products and the potential for a more favorable regulatory environment could make actively managed ETFs a $500 billion asset class by 2020, according to a report released in June by SEI Investments. [Big Growth Seen for Active ETFs]
ARK nvestment Management has filed with the Securities and Exchange Commission for two additional funds: ARK Genomic Revolution Multi-Sector ETF (ARKG), and a composite of the three thematic funds (ARKK), according to the statement.
ARKW Top-20 Holdings
| ATHN | ATHENAHEALTH INC | 5.58% |
| AAPL | APPLE INC | 4.91% |
| FB | FACEBOOK INC-A | 4.44% |
| CRM | SALESFORCE.COM INC | 4.24% |
| TWTR | TWITTER INC | 4.13% |
| N | NETSUITE INC | 3.95% |
| NVDA | NVIDIA CORP | 3.89% |
| TCEHY | TENCENT HOLDINGS LTD-UNS ADR | 3.60% |
| SCHW | SCHWAB (CHARLES) CORP | 3.43% |
| NFLX | NETFLIX INC | 3.42% |
| LNKD | LINKEDIN CORP – A | 3.39% |
| GOOG | GOOGLE INC-CL C | 2.94% |
| AMZN | AMAZON.COM INC | 2.93% |
| DIS | WALT DISNEY CO/THE | 2.71% |
| RHT | RED HAT INC | 2.70% |
| INTU | INTUIT INC | 2.53% |
| QCOM | QUALCOMM INC | 2.47% |
| BABA | ALIBABA GROUP HOLDING-SP ADR | 2.44% |
| CSOD | CORNERSTONE ONDEMAND INC | 2.40% |
| DATA | TABLEAU SOFTWARE INC-CL A | 2.25% |
Table Courtesy: Ark Investment Management
Tom Lydon’s clients own shares of Apple, Facebook and Tesla.