ETF investors seeking to capitalize on the big investment opportunities resulting from a rapidly developing world can look to some disruptive ETFs to enhance a portfolio.
On the recent webcast Thursday, March 22, Disruptive Innovations for the Changing Markets, Catherine Wood, Chief Investment Officer and CEO of ARK Invest, explained that ARK Invest tries to capture long-term exponential growth and capital appreciation created by disruptive innovation.
Specifically, these disruptive innovations are brought about by new products or services that permanently change an industry or economic sector by providing greater simplicity, accuracy, customization and accessibility while driving down costs. These innovations may in turn produce attractive investment opportunities for investors. For example, present day disruptive innovations include DNA sequencing, automation, energy storage, next generation internet and blockchain technology.
“ARK aims to capturing exponential growth in the public markets,” Wood said. The firm captures these opportunities by “identifying leaders, enablers and beneficiaries of innovation and investing in the companies best positioned for growth.”
Markets with Disruptive Innovative Opportunities
At ARK Invest, they have identified three major long-term investment opportunities in industrial, genomics and internet innovations. Industrial innovations include autonomous vehicles, 3D printing, robotics, battery technology, space exploration, mobility-as-a-service and innovative materials. Genomics covers developments in gene therapy/stem cells, DNA, cancer treatments, diagnostics, bioinformatics, therapeutics and agricultural biology. Internet advancements include cloud computing, big data, artificial intelligence, digital media, bitcion/cryptocurrencies and financial technologies.
For instance, Brett Winton, Director of Research for ARK Invest, explained that logistics-as-a-service may be further enhanced through autonomous electric trucks. Autonomous electric truck costs are less expensive on a cost per ton-mile basis than rail, human driven diesel trucks and air freight.
Winton also argued that deep learning – a part of artificial intelligence – could impact more sectors and cause more additional disruptive innovation across various industries. The widespread reach of deep learning could approach a global market cap of $17 trillion in 20 years.
As a way to access these innovations through a targeted fund strategy, ARK Invest offers a suite of actively managed ETFs focused specifically on the three main innovative segments, including the ARK Industrial Innovation ETF (NYSEArca: ARKQ), ARK Web x.0 ETF (NYSEArca: ARKW), ARK Genomic Revolution Multi-Sector Fund (NYSEArca: ARKG) and the ARK Innovation Fund (NYSEArca: ARKK). ARKQ captures the converging industrial and technology sectors, capitalizing from autonomous vehicles, robotics, 3D printing, and energy storage technologies. The ARK Web x.0 ETF targets next-gen internet innovations like artificial intelligence, cloud computing, cryptocurrencies, and blockchain technology. The ARK Genomic Revolution Multi-Sector ETF tracks the convergence of tech and health care. The ARK Innovation ETF is a catch-all for or a broader theme based on the investments across all of the firm’s three innovation themes.
The ARK strategies are “aiming for growth to provide an alpha sleeve for investors’ portfolios,” Wood said. “ARK’s thematic strategies may be a hedge against rapid change that would likely cause turmoil to traditional index strategies.”
Financial advisors who are interested in learning more about technology opportunities can watch the webcast here on demand.