For all the concerns surrounding tech investments over the last year, with mega-cap tech names like Amazon (AMZN) and Meta (META) being the poster children for the broad market selloff, biotech remains an appealing option. The space benefits from its exposure to a traditionally defensive area in healthcare and ongoing innovation at firms like digital employee health company Accolade (ACCD), which is accessible in a health tech ETF from ARK Invest, the ARK Genomic Revolution ETF (ARKG).
ACCD offers data science-fueled healthcare benefits management to employers of all sizes. The firm has had some good news recently, reporting a 9% year-over-year increase in revenue in its earnings last quarter. Its stock has also risen more than 16% over the last month as it aims to become cashflow positive by 2025.
Its True Health Engine leverages real-time data to locate higher-risk members and point out interventions to help not only higher-cost claimants but also the broader member base in an employee health plan. With a recession in the cards – driven by earnings or by the Fed’s efforts to slow growth with its rate cuts – more firms may be looking for the kind of data-driven health platform that ACCD is building, as well.
As such, a health tech ETF like ARKG could be worth considering. ARKG has the highest weight for ACCD of any ETF, according to VettaFi, at 2.3%, charging 75 basis points for its exposures. The strategy is actively managed in the ARK Invest tradition, investing in firms benefitting from disruptive innovation. ARKG specifically looks at firms that benefit from advances in genetics, biotech, and healthcare delivery.
The ETF has seen a spike in inflows over the last five days, adding $26.2 million net, while also returning 10.8% over the last month, outperforming both its ETF Database Category Average and its Factset Segment Average.
While broad tech may be a tough area to invest in right now, some subsections are still relatively nimble and benefit from innovation. Health and biotech firms may be one equities investment to watch this year, especially if the Fed manages a soft landing for the economy, with ACCD just one firm available in the health tech ETF ARKG.
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