Whether society is ready for it or not, robotics, artificial intelligence (AI), machine learning, or any other type of disruptive technology will be the next wave of innovation. For investors who missed out on the bull market run of FAANG (Facebook, Amazon, Apple, Netflix, Google) stocks, they can look to capitalize on disruptive tech options in 2019 and beyond that–one of those being the ARK Innovation ETF (NYSEArca: ARKK).
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.
According to the Harvard Business Review, global firm Deloitte identified seven disruptive forces that leaders should understand and incorporate into their strategy for future growth:
- Internet of things (IoT): disrupting the labor market and forcing employees to be “tech fluent.”
- Continued growth of big data via analytics in organizations
- “Cyber-physical world” that focuses on efficiency and the automation of manual tasks
- Automation and higher-level value creation
- The concept of “career” is changing via technology, resulting in a 60-70-year work life with continuous learning and career shifts.
- An explosion in contingent work with a distributed talent pool that improves productivity and speed
- Diversity and generational change for the workforce
“Some of the traditional IT areas such as devices and infrastructure is slowing down and companies are using investment to drive adoption of more disruptive technologies such as artificial intelligence, robotic process automation, internet of things, big data analytics, blockchain and cloud to cut costs and drive more efficiency,” said Jyoti Lalchandani, vice-president and regional managing director for research firm International Data Corporation (IDC).
As for ARKK, the actively-managed ETF seeks to provide investors with:
- Exposure to Innovation: Aims for thematic multi-cap exposure to innovation across sectors.ARK believes the securities held in ARKK present the best risk-reward opportunities from ARK’sinnovation-based themes.
- Growth Potential: Aims to capture long-term alpha+ with low correlation of relative returns totraditional growth strategies and negative correlation to value strategies.
- Diversification: Offers a tool for diversification due to little overlap with traditional indices.It can be a complement to traditional value/growth strategies.
- Research:Combines top-down and bottom-up research in its portfolio management to identify innovative companies and convergence across markets.
- Cost Effectiveness: Provides a lower cost alternative to mutual funds with true active management in an Exchange Traded Fund (ETF) that invests in rapidly moving themes.
Thus far, ARKK is up 26.97 percent.
For more market trends, visit ETF Trends.
