Investors are always looking for the next big thing and, in recent years, much of that search revolved around finding the next equivalents of the famed FANG stocks. Of course, stock picking is difficult, but there are some ETFs that offer investors exposure to the next generation of hyper-growth names.
The ARK Innovation ETF (NYSEArca: ARKK) is a prime example of one of those ETFs. ARKK is actively managed – in fact, it’s the largest equity-based active ETF on the market – meaning its managers are constrained by an index and can source growth opportunities from an array of sectors and industries.
ARKK, often known as one of the ETFs with one of the largest weights to Tesla, typically holds between 35 and 55 stocks. Although that’s a concentrated lineup, the fund offers wide exposure to a compelling cross-section of fast-growing themes.
“Companies within ARKK include those that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies (‘’Genomic Revolution’), industrial innovation in energy, automation, and manufacturing (‘Industrial Innovation’), the increased use of shared technology, infrastructure and services (‘’Next Generation Internet’), and technologies that make financial services more efficient (‘Fintech Innovation’),” according to ARK Invest.
Efficient, Rewarding
Helped by Tesla, ARKK is higher by almost 77% this year. In addition to Tesla, Nvitae (NASDAQ: NVTA), Roku (NYSE: ROKU) and Square (NYSE: SQ) are among the names driving ARKK upside this year. Those stocks combine for almost 19% of ARKK’s weight.
“These disruptive technologies are experiencing an acceleration in adoption in this current environment, and the companies within our ETFs are gaining significant market share and outperforming the broader market,” ARK portfolio manager Renato Leggi in an interview with CNBC.
“The disruption that’s caused by these innovative companies like Tesla and Square are making it critical for investors to allocate to innovation in their portfolios and we see this as just the beginning of this trend.”
Regarding ARKK’s Roku allocation, streaming is still in its formative stages and is on the cusp of potentially exponential growth over the next several years. ARK notes that content matters, but quality often does not while pointing out that no one can compete with Netflix in terms of matching viewers to the content they desire.
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.