The story of Noah’s Ark is well known, but what is the market’s equivalent? Enter Cathie Woods with ARK Investments.
First, a quick history: Ark Invest was founded by Cathie Woods in 2014. Ms. Woods was fresh off her role as chief investment officer of global thematic strategies at AllianceBernstein. Ark is an acronym for Active Research Knowledge which shows how the fund contrasts with the passive management that dominated the latter part of the decade. Ark’s mission is “to deliver long-term capital appreciation with low correlation to traditional investment strategies by identifying and investing in the leaders, enablers, and beneficiaries of disruptive innovation”.
In steps the pandemic, an ultimate form of disruption that has led to global change in the economy. There is also the case of growing strength in millennials and Gen-Zers as investment citizens, hungry for a new economy driven by AI, DNA sequencing, robotics, electric vehicle, and alternative energy. Ark has thrived in this environment, generating a 170% return in 2020 in its flagship Ark Innovation fund. Given Ark’s success under the stewardship of Ms. Woods, it is not a surprise that 40% of the top 10 searches by financial advisors were dedicated to Ark funds.
|RANK||TOP ETFS – BY ALL FAs (Total Traffic) Last Week||Ticker||TOP ETFS BY FAs w/ AUM>$1B (Total Traffic) Last Week||Ticker||ETF CATEGORIES SPOTLIGHT- ALL CAP EQUITIES (Total Traffic) Last Week||ETF CATEGORIES SPOTLIGHT- FINANCIAL EQUITIES (Total Traffic) Last Week|
|1||SPDR S&P 500 ETF||SPY||VanEck Vectors Gold Miners ETF||GDX||ARKK||XLF|
|2||ARK Innovation ETF||ARKK||S&P 500 SPDR||SPY||ARKQ||KRE|
|3||ProShares Ultra VIX Short-Term Futures||UVXY||Invesco QQQ||QQQ||USMF||VFH|
|4||iShares Silver Trust||SLV||Senseonics Holdings||SENS||WCLD||IXG|
|5||Invesco QQQ||QQQ||Technology Select Sector SPDR Fund||XLK||WBIY||DFNL|
|6||VanEck Vectors Gold Miners ETF||GDX||S&P 500 Technology Sector SPDR||XLK||EQAL||FTXO|
|7||ETFMG Alternative Harvest ETF||MJ||U.S. Global Jets ETF||JETS||IPO||KBE|
|8||ARK Fintech Innovation ETF||ARKF||ProShares Ultra VIX Short-Term Futures||UVXY||PY||KBWR|
|9||ARK Web x.0 ETF||ARKW||Mastech Holdings Inc||MHH||XWEB|
|10||ARK Genomic Revolution ETF||ARKG||Ultra VIX Short-Term Fut Proshares||UVXY||IWP|
|11||iShares MSCI Emerging Markets ETF||EEM||S&P Regional Banking ETF SPDR||KRE||FAD|
|12||iShares Russell 2000 ETF||IWM||Globalstar||GSAT||FV|
|13||SPDR Gold Trust||GLD||Comstock Mining Inc||LODE||CSD|
|14||SPDR Dow Jones Industrial Average ETF||DIA||Financial Select Sector SPDR Fund||XLF||EMLP|
|15||ProShares UltraPro QQQ||TQQQ||ETFMG Alternative Harvest ETF||MJ|
|16||iShares 20+ Year Treasury Bond ETF||TLT||Northern Dynasty Minerals||NAK|
|17||Global X Lithium ETF||LIT||Silver Trust Ishares||SLV|
|18||Global X Cannabis ETF||POTX||Financial Bear 3X Direxion||FAZ|
|19||Technology Select Sector SPDR Fund||XLK||Ring Energy Inc||REI|
|20||iPath Series B S&P 500 VIX Short-Term Futures ETN||VXX||iShares MSCI Global Select Metals & Mining Producers ETF||PICK|
ARK Innovation (ARKK) was #2 in searches by All Financial Advisors last week. ARKK is a regular staple on the search list but its ranking was a high-water mark, coming in just behind the SPY. This is an actively-managed fund that follows themes including Genomic Revolution, Automation Transformation, Energy Transformation, AI, FinTech innovation. Top holdings in the fund include Tesla (TSLA), Roku (ROKU), Square (SQ), Teladoc Health (TDOC), and Zillow Group (ZG). To say this was the ‘sweet spot’ of 2020 would be an understatement. If you could go back in time to January 1, 2020 and pick a list of stocks- as well as perhaps a nice house with land to deal with a pandemic- you would choose these names.
Ark’s performance has led to an uptick in interest in its other funds. #8 on the list of searches is the ARK Fintech Innovation ETF (ARKF). This was only the second time this has landed in TrackStar’s Top 20. The fund is just over a year old, returning 133% over that period. 52% of the fund is in Software & IT. Top holdings include SQ, ZG, PayPal (PYPL), Tencent Holding (TCEHY), and Silvergate Capital (SI). Not to be Captain Obvious here, but, the fund looks for innovators in the fintech world which the issuer defines as “the introduction of technologically enabled new products of service that potentially change the way the financial sector works.”
Ark’s Web X.0 ETF (ARKW) was #9 on the list for financial advisors. This is the second most searched Ark fund on our list over the past four months, hitting a high at #5 the week of January 18. This fund has a broader mandate than the others as it is not limited to geography. The fund managers are tasked with identifying companies that will be the next generation of Internet evolution. The one-year return on this fund is 167%. We do take a little issue with the geographic description provided by Ark as the United States makes up 83% of this fund (compared to 65% in ARKF and 88% in ARKK). Top Holdings include TSLA, Grayscale Bitcoin (GBTC), SQ, TDOC, and ROKU. As you can see, there is overlap in these funds. But, if you are looking for a little bitcoin exposure and do not have an extra $56K laying around, then this can help fill the void.
Finally, we have Ark Genomic Revolution (ARKG) which looks for companies that will benefit from innovations in the genomic-related industry. It looks for companies that develop, produce, or enable targeted therapeutics, stem cell, bioinformatics, stem cells, or molecular diagnostics. Top plays here include TDOC (a popular theme in these ETFs), Pacific Biosciences (PACB), Twist Biosciences (TWST), Regeneron (REGN), and Exact Sciences (EXAS). This fund has returned 195% over the past year.
Cathie Woods and Ark have established a well-earned reputation for being at the forefront of innovation. The ETF recently announced the development of a Space ETF which is expected to launch in late March and promises to be a hot commodity. We will continue to monitor searches around these hot names but, if you are looking for a vessel to float atop of all this liquidity- gracias central banks- then these instruments should be reviewed.