The ARK Genomic Revolution Multi-Sector Fund (CBOE: ARKG) turns six years old next month and over that time, it’s developed a reputation as one of the best-performing healthcare ETFs, biotechnology or otherwise.
That success is attributable to the ability of ARK Invest’s managers to identify disruptive genomics equities well before markets fully appreciate the growth stories behind those names.
Consider the investment opportunity found in the Clustered Regularly Interspaced Short Palindromic Repeats, or CRISPR, genome-editing platform. CRISPR is a genome-editing platform that will address the world’s most salient health issues. It is like a ‘molecular swiss army knife’ with a rapidly expanding number of tools that perform different functions.
“The major premise behind ARK Funds, and likely the reason for the success is the belief that the market at large does not know how to efficiently price and value the type of innovation these ETFs are investing in,” according to Seeking Alpha. “The returns of the individual funds are excellent, and they are excellent over extended periods of time.”
Assessing ARKG
The actively managed ARKG offers investors a thematic multi-capitalization exposure to innovative elements that cover advancements in gene therapy bio-informatics, bio-inspired computing, molecular medicine, and pharmaceutical innovations.
ARKG includes companies that merge healthcare with technology and capitalize on the revolution in genomic sequencing. These companies try to better understand how biological information is collected, processed, and applied by reducing guesswork and enhancing precision; restructuring health care, agriculture, pharmaceuticals, and enhancing our quality of life.
There’s potentially epic growth to be had with ARKG because of where many of the fund’s components are in the clinical trial stages.
“One of the biggest drivers for this placement, in my mind, is centered in the stages of clinical trials that most of the vaccine and therapeutics in the holdings are in,” according to Seeking Alpha. “They are mostly, if not all, pre-phase 1 through phase 3, placing them at least a year or two away from being in the market. This means they are some time away from generating significant earnings and bringing valuation metrics more in line with the broader market.”
Genomics companies try to better understand how biological information is collected, processed and applied by reducing guesswork and enhancing precision; restructuring health care, agriculture, pharmaceuticals, and enhancing our quality of life.
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.