Those who are interested in buying into the cutting edge of next generation healthcare might find a home with ARKG, a specialized ETF choice from Ark Invest. Whether this is a good ETF to buy depends largely on your investment strategy, and your outlook on bioscience and related industries.
One of the first things to know about this exchange traded fund is that it is narrowly focused on technologies that enhance outcomes in human health.
Being 96% based on healthcare equities, ARKG is not a multi-sector fund. It’s something that has been created specifically as a pure play on the use of new science to advance medical research.
How Does ARKG ETF Work?
First of all, what is an exchange traded fund?
ETFs are weighted funds that hold a basket of equities, which are publicly traded in a market day. They are easy for traders to access through their online brokerage services.
Their holdings are transparent (at least, they should be) and like other funds, they have their overall fees and minimum contributions and other requirements for participation.
ETFs need to be approved by the U.S. Securities and Exchange Commission, a bottleneck that has plagued those trying to greenlight ETFs based on cryptocurrencies.
Meanwhile, Ark’s funds basically sailed through and have lengthy trading histories.
ARKG and The Basket of ARK Funds
For context, ARKG is part of a suite of specialized Ark funds under the same corporate umbrella and management.
Within that collection of funds, ARKG is the Genomics Revolution Fund, and is very carefully focused on domestic and foreign companies that have operations related to genomics and biotechnology for healthcare.
Specifically, Ark Invest points to various foundations for ARKG equities, including CRISPR (a major type of advancement in genome research) and stem cell research, as well as the wider field of “bioinformatics,” which many would describe as “software for biology.”
Targeted therapeutics and molecular diagnostics are also points of focus for this fund, which takes an interest in companies showing promise with DNA and RNA related work. The application of genomics to projects like CRISPR research provides an example of a range of use cases driving success at firms like those held by the fund.
Cathie Wood ARKG Vision Is Ahead Of Its Time
As we pointed out in our prior piece on ARKF, much of the interest in the ARK Invest funds is happening because the founder, Catherine Wood, delivered some pretty prescient opinions on equity movements in the past, specifically around Tesla (TSLA).
The upshot is that all of the Ark funds are getting attention in today’s markets. ARK spokespersons talk about all of the work that has been going on since the emergence of these eminently tradable funds, to help track markets and optimize what ARKK, ARKG, ARKF and the others have to offer.
ARK Invest also holds quarterly ETF webinars to orient newbies and seasoned traders collectively, and to keep everyone in the loop on how these funds are being actively managed.
Investors can also access more information on two additional index ETFs from Ark Invest: PRNT, which is built around the promise of 3D printing, and IZRL, which is tracking Israeli tech equities. Press releases available on the web site further notify investors about change at Ark Invest.
ARKG Performance Has Been Astonishing
In the past year, ARKG’s value has spiraled up from around $24 per share, to highs of over $100 per share. Even with a pullback ARKG track record reflects gains of over 300% year-over-year. This is not an asset that has fizzled since its debut on the markets.
Many attribute the savvy asset-holding strategies and focused management of ARKG to its successful rise to the top.
The fund truly does center on big players in the world of bioscience and DNA research. The idea of selectively picking participants and giving investors the whole truth lets individuals make up their minds about whether the overall strategy is targeted well.
ARKG Holdings Are Disruptive Innovators
A quick look at some top ARKG holdings shows how this type of exchange traded fund philosophy works.
There’s Teladoc Health (TDOC), widely known as the biggest telehealth provider in the country, and Exact Sciences (EXAS), which pioneered the Cologuard home stool test for colorectal cancer that is now such a fixture in promotions for screening cancers.
In general, the Exact Sciences firm’s dedication to molecular diagnostic research and correlating track record make it an attractive part of ARKG’s foundation.
There’s also Twist Bioscience (TWST), a company that manufactures synthetic DNA for genomics solutions. The addition of Teladoc seems evident in a time when so many doctor interactions are going online.
As for Exact Sciences (EXAS) and Twist, having diagnostic companies and suppliers in place can only help with diversifying within the prescribed band of scientific actors.
Other companies in the ARKG holdings category need little introduction – Regeneron (REGN) and Novartis (NVS) are pretty familiar names in biotechnology and healthcare. Regeneron, for its part, has developed one of the best antibody cocktails for covid-19 treatment.
In fact, taking a wider look, many of the top holdings of the fund seem like building blocks for addressing the covid-19 pandemic that has rocked the entire world over the past year.
That alone drives quite a bit of interest in this healthcare related biosciences ETF, but not without other kinds of support from those who were already seeing broader use for genomics research before the pandemic.
The above-mentioned use of genomics to help with cancer diagnosis and treatment, for example, places funds like ARKG in the center of a billion-dollar field.
ARKG Fees Are Very Acceptable
The ARKG fund holds assets of over $9 billion, and lists an expense ratio of 0.75%, which is under the average for the greater ETF menu as a whole.
As an open-ended fund, ARKG can generate unlimited shares and allow holders to participate in a hot market that pioneers lifesaving technologies.
Trading volumes are typically in the millions of shares, which shows how much this fund is being used in modern sessions. Not every ETF around enjoys this volume of trading, or this clarity of purpose for investor returns.
Is ARKG A Good ETF To Buy Now?
Historic chart behavior shows there is an appetite for a fund based on companies intent on, as Ark Invest puts it, “extending and enhancing the quality of human and other life” and the bioscience sector in particular.
Having competed with the S&P 500 index handily over the past few years, ARKG is an option for building part of a portfolio that can grow based on scientific advances that we see happening around us continually.
Again, the use of ETFs as an alternative to holding more concrete assets is a value, too. The liquidity and utility of a fund like this means smaller investors can get in, track its progress, and be able to pivot quickly, do appropriate profit taking, or go to the sidelines as necessary.
All of that makes ARKG appealing in today’s investment world.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.