{"id":498433,"date":"2021-12-09T15:39:59","date_gmt":"2021-12-09T20:39:59","guid":{"rendered":"https:\/\/financhill.com\/blog\/?p=498433"},"modified":"2021-11-19T10:19:18","modified_gmt":"2021-11-19T15:19:18","slug":"is-arkk-an-etf-to-own-for-the-next-decade","status":"publish","type":"post","link":"https:\/\/financhill.com\/blog\/investing\/is-arkk-an-etf-to-own-for-the-next-decade","title":{"rendered":"Is ARKK an ETF to Own for the Next Decade?"},"content":{"rendered":"<div>Last year&#8217;s ETF standout performer was <strong>ARK Innovation ETF (<a href=\"https:\/\/financhill.com\/stocks\/nysearca\/arkk\">ARKK<\/a>)<\/strong> an exchange-traded fund focused on disruptive innovation.<\/div>\n<div>&nbsp;<\/div>\n<div>Investors took notice of ARKK&#8217;s astounding annual return in 2020. But what about now? Is ARKK fizzling with a lower price per share, or is now the time to buy and hold?<\/div>\n<div>&nbsp;<\/div>\n<h2>ARKK Is A Rare Actively Managed ETF<\/h2>\n<div>Exchange-Traded Funds, or ETFs, are essentially bundles of securities that are sold under one ticker symbol. For example, SPY provides exposure to all the companies in the S&amp;P 500.<\/div>\n<div>&nbsp;<\/div>\n<div>What makes ETFs unique is their structure. An ETF can focus on a sector, track a particular investment strategy, or focus on a particular commodity.<\/div>\n<div>&nbsp;<\/div>\n<div>Investors flock to ETFs for their long-term prospects, more so than their short-term gain. ETFs are generally managed passively though Cathie Wood at ARK Invest has put an ETF wrapper around her active management strategy, a rarity in the ETF world.<\/div>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/ARKK?periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"400\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<h2>ARKK Pros &amp; Cons<\/h2>\n<p>Gutsy investors with a taste for risk, are holding on to ARK Innovation ETF even after its price has struggled to gain traction.<\/p>\n<p><span style=\"font-size: 1em;\">Short-term focused traders will be repelled by negative price action. But for longer term investors, ARKK has been in a long-term <\/span>uptrend. The same largely holds true for some of ARKK&#8217;s largest holdings<span style=\"font-size: 1em;\">. <\/span><\/p>\n<p><span style=\"font-size: 1em;\">ARKK&#8217;s top five holdings are in <\/span><strong style=\"font-size: 1em;\"><a href=\"https:\/\/financhill.com\/blog\/investing\/why-does-cathie-wood-like-tesla\">Tesla<\/a> (<a href=\"https:\/\/financhill.com\/stocks\/nasdaq\/tsla\">TSLA<\/a>), Teledoc Health (<a href=\"https:\/\/financhill.com\/stocks\/nyse\/tdoc\">TDOC<\/a>), Roku (<a href=\"https:\/\/financhill.com\/stocks\/nasdaq\/roku\">ROKU<\/a>), Unity Software (<a href=\"https:\/\/financhill.com\/stocks\/nyse\/u\">U<\/a>), and Coinbase Global, Inc. (<a href=\"https:\/\/financhill.com\/stocks\/nasdaq\/coin\">COIN<\/a>)<\/strong><span style=\"font-size: 1em;\">. These five companies represent 30 percent of the fund. All but one, <\/span><strong style=\"font-size: 1em;\">Teladoc (<a href=\"https:\/\/financhill.com\/stocks\/nyse\/tdoc\">TDOC<\/a>),<\/strong><span style=\"font-size: 1em;\"> have been trending up in the medium to long term. In all, ARKK holds interests in 45 businesses it believes are disruptive.<\/span><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/TDOC?periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"400\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p>Between February and July of 2021, many holders dumped their shares of ARKK. But those outflows began to dramatically slow down in mid-summer. Those with decade long horizons versus day-to-day outlooks view ARKK as being in a <a href=\"https:\/\/www.business-standard.com\/article\/markets\/what-s-consolidation-in-stock-market-and-how-it-can-help-you-spot-breakouts-120032600180_1.html\" target=\"_blank\" rel=\"noopener\">consolidation<\/a> phase.<\/p>\n<p>Consolidations are often followed by break-outs, so ARKK&#8217;s upside looks promising. Buying ARKK while its share price has taken a hit offers significant upside potential for long-term holders. However, the volatility of the underlying holdings means significant turbulence could be experience in the short to medium term.<\/p>\n<h2>ARKK Expense Ratio<\/h2>\n<p>ARK Invest currently has <a href=\"https:\/\/www.etf.com\/channels\/ark-etfs\" aria-invalid=\"true\" target=\"_blank\" rel=\"noopener\">$20.45B<\/a> in assets.<\/p>\n<p>The ARKK expense ratio is pegged at 0.75 percent which is higher than <a href=\"https:\/\/www.wsj.com\/articles\/BL-HOWTOPFB-29\" target=\"_blank\" rel=\"noopener\">average<\/a>. But, that doesn&#8217;t necessarily mean it&#8217;s too high.<\/p>\n<p>ETFs tend to have slightly lower expense ratios than mutual funds and a passively managed ETF will generally have lower expense ratios than an actively managed one, like ARKK. In general, an expense ratio above 1.5%&nbsp;is considered excessive.<\/p>\n<h2>ARKK&#8217;s Management<\/h2>\n<p>ARKK is an actively managed ETF, meaning that an individual or a team manages the fund&#8217;s portfolio.<\/p>\n<p>While only a few ETFs are actively managed, the track record of funds using this approach is more variable than those of passive ETFs.<\/p>\n<p>If the manager times the market well the actively managed fund can perform better than the market while a poor manager will suffer the consequences of mis-reading the market.<\/p>\n<h2>ARKK&#8217;s Track Record<\/h2>\n<p>Like many ETFs, ARKK has a volatile history. In its first year on the market, 2015, it earned a modest <span class=\"W(20%) D(b) Fl(start) Ta(e)\">3.76 percent. <\/span><\/p>\n<p><span class=\"W(20%) D(b) Fl(start) Ta(e)\">The next year was down -1.96 percent. But then it soared higher by 87.38 percent in 2017. <\/span><\/p>\n<p><span class=\"W(20%) D(b) Fl(start) Ta(e)\">The next year showed only modest growth again of 3.58 percent. But, in 2020, an <em>annus horribilis<\/em> for its many crises, ARKK soared to 152.52 percent. That kind of phenomenal return is unusual so a downward trend to a more reasonable gain in 2021 shouldn&#8217;t overly concern investors. <\/span><\/p>\n<h2>About Cathie Wood, Visionary Investor and Founder of Ark Invest<\/h2>\n<p><a href=\"https:\/\/financhill.com\/blog\/investing\/stocks-cathie-wood-just-bought\">Cathie Wood<\/a> founded ARK Invest Management LLC, also known as ARK Invest, in 2014. Wood is a veteran investor&#8211;some say a visionary- who focuses on innovation and market disruption.<\/p>\n<p>Today, ARK provides investment management services throughout North America, Europe, Australia, and Asia.<\/p>\n<p>ARK&#8217;s focus is solely on innovation such as DNA sequencing, blockchain technology, robotics, 3-D printing, and automation.<\/p>\n<p>Wood firmly believes in &#8220;<a href=\"https:\/\/ark-invest.com\/invest-in-innovation\/\" target=\"_blank\" rel=\"noopener\">investing in the future today.<\/a>&#8221; She also believes disruptive technologies will change not only everyday life but the nature of business in the near future.<\/p>\n<p>Mentored by the economist <a href=\"https:\/\/www.britannica.com\/biography\/Arthur-Laffer\" target=\"_blank\" rel=\"noopener\">Arthur Laffer<\/a>, Wood first went to work as an assistant economist at <a href=\"https:\/\/www.capitalgroup.com\/?cid=p63608481521&amp;ad_id=520662520924&amp;ext_id=&amp;ds_rl=1292280&amp;gclid=CjwKCAiA7dKMBhBCEiwAO_crFM5AewYt8Ko6W-zXTfhGjlsrzJJAjtzlQr49MuuwjPFxNTjVuGE4ehoCMJYQAvD_BwE&amp;gclsrc=aw.ds\" target=\"_blank\" rel=\"noopener\">Capital Group<\/a>, later moving to New York City to work at <a href=\"https:\/\/www.jennison.com\/\" target=\"_blank\" rel=\"noopener\">Jennison Associates<\/a>.<\/p>\n<p>In 1991, she co-founded Tupelo Capital Management, along with <a href=\"https:\/\/www8.gsb.columbia.edu\/chazen\/about\/iab\/wang\" target=\"_blank\" rel=\"noopener\">Lulu Chow Wang<\/a>. Wood then joined <a href=\"https:\/\/www.alliancebernstein.com\/corporate\/en\/home.html\" target=\"_blank\" rel=\"noopener\">Alliance Bernstein<\/a> in 2001, leaving in 2014, after her idea to create a disruption-based ETF&nbsp; was deemed too risky by the firm.<\/p>\n<p>Wood ardently supported the re-election of Donald Trump in 2020 because of his support of deregulation. She is friends with <a href=\"https:\/\/financhill.com\/blog\/investing\/how-did-elon-musk-make-his-money\">Elon Musk<\/a> and is a devout Christian. In fact, she got the <a href=\"https:\/\/www.scmp.com\/magazines\/style\/celebrity\/article\/3123779\/cathie-wood-religious-reddit-hit-trump-supporter-meet-ark\" target=\"_blank\" rel=\"noopener\">idea<\/a> for the name of ARK Invest after reading about the Ark of the Covenant in her Bible. Wood is active on <a href=\"https:\/\/twitter.com\/cathiedwood\" target=\"_blank\" rel=\"noopener\">Twitter<\/a> and <a href=\"https:\/\/www.reddit.com\/r\/CathieWood\/\" target=\"_blank\" rel=\"noopener\">Reddit <\/a>where she frequently posts ARK investment and sector research.<\/p>\n<p>ARK Invest offers a number of other ETFs: <strong>ARK Autonomous Tech. &amp; Robotics ETF (<a href=\"https:\/\/financhill.com\/stocks\/bats\/arkq\">ARKQ<\/a>); ARK Next Generation Internet ETF (<a href=\"https:\/\/financhill.com\/stocks\/nysearca\/arkw\">ARKW<\/a>); ARK Genomic Revolution ETF (<a href=\"https:\/\/financhill.com\/stocks\/bats\/arkg\">ARKG<\/a>); ARK Fintech Innovation ETF (<a href=\"https:\/\/financhill.com\/stocks\/nysearca\/arkf\">ARKF<\/a>); and ARK Space Exploration &amp; Innovation ETF (ARKX).<\/strong><\/p>\n<p>The firm also has exposure to several index funds, including PRNT, the 3D Printing ETF, <strong>ARK Israel Innovative Technology ETF (<a href=\"https:\/\/ark-funds.com\/funds\/izrl\/\" target=\"_blank\" rel=\"noopener\">IZRL<\/a>),<\/strong>&nbsp;and <strong>ARK Transparency ETF (<a href=\"https:\/\/ark-funds.com\/funds\/ctru\/\" target=\"_blank\" rel=\"noopener\">CTRU<\/a>)<\/strong>. All are aligned with her thesis on disruptive innovation, all are <a href=\"https:\/\/financhill.com\/blog\/investing\/the-cathie-wood-effect\">Cathie Wood&#8217;s ideas<\/a>, but none are as buzz-worthy as the flagship AARK.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Last year&#8217;s ETF standout performer was ARK Innovation ETF (ARKK) an exchange-traded fund focused on disruptive innovation. &nbsp; Investors took notice of ARKK&#8217;s astounding annual return in 2020. But what about now? Is ARKK fizzling with a lower price per share, or is now the time to buy and hold? &nbsp; ARKK Is A Rare [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":498440,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[22],"tags":[],"class_list":["post-498433","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/financhill.com\/blog\/wp-content\/uploads\/2021\/12\/Untitled-design-2021-11-19T084959.182.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9czeV-25Ff","_links":{"self":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/498433","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/comments?post=498433"}],"version-history":[{"count":13,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/498433\/revisions"}],"predecessor-version":[{"id":498453,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/498433\/revisions\/498453"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media\/498440"}],"wp:attachment":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media?parent=498433"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/categories?post=498433"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/tags?post=498433"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}