Tesla and Other Stocks Helped This Disruptive ETF Outperform in Q1

It was a rough first quarter for equities due to the COVID-19 pandemic, markets are still grappling, but Tesla (NASDAQ: TSLA) was one of the stars of the January through March helping the ARK Autonomous Technology & Robotics ETF (NYSEARCA: ARKQ) to decent showing.

ARKQ captures the converging industrial and technology sectors, capitalizing from autonomous vehicles, robotics, 3D printing, and energy storage technologies. That wide mandate helps lever the ARK fund too much more than just self-driving cars, an important trait at a time of rapid robotics advancements.

The actively managed ARKQ allocates just over 14% of its weight to Tesla, good for one of the largest weights to the electric vehicle maker among all ETFs. However, some other stocks contributed to the fund’s fair first-quarter performance.

“Materialise (MTLS) contributed positively as 3D printing has been enlisted to create parts for COVID-19-related equipment like ventilators, nasal swabs, and face mask shields,” said ARK Chief Investment Officer Catherine Wood in a recent note.

ARKQ Assessment

ARK, which also issues a 3D printing ETF, believes that the market will revolutionize manufacturing by collapsing the time between design and production, reducing costs, and enabling greater design complexity, accuracy and customization than traditional manufacturing. Materialize is one of ARKQ’s top 10 holdings.

“In most cases, 3D printers can print parts much more quickly and inexpensively than traditional manufacturing processes,” said Wood.

Disruptive technology is not relegated to certain sectors as it will permeate into all industries in some form or fashion. For example, augmented reality is technology comprised of digital images superimposed over the real world, and its use is primed to drive industry growth–industries like real estate and manufacturing are already putting the technology to use in a variety of ways.

As for Tesla, ARKQ’s largest holding, Elon Musk’s company could emerge a winner in an automotive industry that’s being drubbed by the coronavirus.

“ARK believes that the auto industry will begin to consolidate sooner than anticipated in response to the COVID-19 crisis and that Tesla will gain market share as it is well ahead of the curve on electrification and autonomy,” said Wood.

ARKQ outperformed both the S&P 500 and MSCI World Index in the first quarter.

For more on disruptive technologies, visit our Disruptive Technology Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.