Is ARKK A Good ETF?

Is ARKK A Good ETF?  Ark Invest is a big name in next generation investments. Through the experience of its figurehead leader, Cathie Wood, and her team, the fund manager has honed in on some of the biggest trends in today’s business world.

ARKK is the firm’s innovation ETF and has had a phenomenal track record to-date. Is it a buy? 

First, we need to understand what makes ARKK different.

What is an ETF?

The essential nature of an exchange traded fund brings together a series of similar equities that have something in common. It then allows traders to buy and sell this fund in real time, during a market day.

One of the biggest benefits of ETFs is that they’re always available to invest in, or divest from, without a lot of undue delay, and so small traders using major brokerage platforms may choose to buy an ETF vs a potentially more costly mutual fund.

For example, instead of buying physical precious metals like gold or silver, you can buy a gold or silver ETF. That allows you to skip the troublesome process of finding somewhere safe to store all of that gold or silver.

It also makes cost basis accounting easier, in many cases. The ETF can be a useful “on paper” approach to trading physical commodities.

It has other major uses, too. Various firms are trying to get cryptocurrency ETFs greenlighted in the U.S. (although the SEC has been resistant) because that can make it so much easier for smaller investors to buy into the crypto boom.

ARKK: Ark’s Flagship Fund

So what is ARKK’s place in the world of ETFs?

One important thing to understand is that Ark Invest offers a series of exchange traded funds. There’s ARKF, the Fintech Innovation Fund, and ARKQ, the Autonomous Technology and Robotics ETF, as well as ARKW, the Next Generation Internet ETF, and ARKG, the Genomic Revolution ETF.

These other ETFs are appealing to traders in their own right – robotics and genomics are fields with vast potential – but for a more collective approach to Ark Invest’s innovation search, ARKK can be entirely appropriate.

Experts call ARKK the “Ark flagship fund” because it’s based on the original principal of the Ark Invest ETF initiative, and generally looking for innovation in a broader way than some of these other more targeted ETFs. 

As if all of the above weren’t enough, Ark Invest also provides indexed innovation ETFs PRNT, the 3D Printing ETF, and IZRL, the Israel Innovative Technology ETF and the only one in the lineup based on a specific geography.

All of these options helped Ark to garner the ETF Suite of the Year award doled out by Fund Intelligence during The Mutual Fund Industry and ETF Awards of 2019.

Cathie Wood: ARK Innovation Fund

As Tesla (TSLA) boomed, minting new millionaires and billionaires over the past year, Wood acquired considerable street credit that added to the interest around these exchange traded funds.

Not content to rest on her laurels, though, Wood and her team have been proactive in describing the value propositions attached to the various Ark Invest funds on the company’s web site.

More recently, Wood responded to ARKK gains as bond yields stabilized this month, suggesting that she’s confident a bull market run will raise these funds to greater heights.

“What has just happened in the equity market is a massive and severe….rotation into value stocks,” Wood said in a recent webinar, according to CNBC. “The bull market broadened out into value in a more serious way.”

It’s that type of confidence, in part, that has springboarded Ark Invest to its current heights, and that is likely to help the individual ETFs like ARKK to maintain staying power in a competitive field.

ARKK Holdings

One very interesting strategy for Ark Invest is the recent acquisition of over 700,000 shares of Draftkings, an online gaming giant that’s up almost 30% year to date.

The relevance of Draftkings to online casino gaming, new provably fair gaming models, and modern entertainment, plus its aggressive online ad campaigns, creates a value not lost on those watching closely.

By making big acquisitions like these, Ark is betting that online gaming has further to fly in the more general fintech sector. That makes abundant practical sense to traders and investors who are seeing the massive impact of Covid19 closures and restrictions with their own eyes: families hunkered down day after day, entertaining themselves at home.

In pouncing on the opportunity for these sorts of “pure plays,” Ark’s strategy is not just limited to the ARKK Ark Innovation fund, either – another Ark ETF, the Ark Next Generation Internet ETF or ARKW, recently bought 500,000 shares of Roblox (RBLX), a gaming platform that’s popular with many younger users.

For some who understand how important it is to move into big markets early, the appeal of the RBLX strategy is evident, and giving traders a lodestar to move toward as they make their own predictions.

ARKK Track Record & Performance

As for its pricing track record, ARKK was up 400% year-over-year. It started out at $20 in 2014, and now trades around $125, which shows that early investors already doubled their money a couple of times.

For many fans of long term buy-and-hold ETFs, the potential for another doubling is somewhat evident, especially for those who believe in a pivot toward the types of online gaming giants that Ark funds are scooping up.

It’s not just the meteoric rise of Tesla (TSLA) or Apple (AAPL) that shows how market movers can enrich those who purchase them.

The market as a whole is extremely volatile, but digital assets like Bitcoin tower above past values, and a fund that has not deflated from its debut pricing is even more attractive in this context.

Is ARKK ETF A Good Buy?

The bottom line is that ARKK is especially attractive to people who believe in the Ark Invest philosophy and think that this company can spot next generation trends that will manifest over the next decade.

If you think that a company with Ark’s track record is uniquely poised to profit from tomorrow’s digital stock world, it’s not a bad idea to consider this flagship fund as a broader umbrella of innovation-related buying.

You can get into ARKF and ARKG and ARKW if you want to, but ARKK is seen as the primary model and something that Ark Invest is proud of in introducing the ETF to the greater public.

Take a look and see how ARKK is a harbinger for this kind of market option in a new world where equities compete with commodities and cryptocurrencies for value and attention.

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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.