Investors who choose exchange-traded funds (ETFs) over individual stocks generally have more modest expectations about what kind of returns to expect. Although they want to see their investments rise in value, ETF investors understand that a broadly diversified portfolio of stocks inevitably means having at least a few poor performers water down the huge returns from top stock holdings.
But rising star investor Cathie Wood has changed the rules for ETFs. Her ARK Invest management company has five actively managed funds, and they've absolutely crushed the stock market over the past year.
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If you'd been fortunate enough to invest $10,000 in any of Wood's five ARK Invest active ETFs, you would've more than doubled your money in just a year's time. Below, we'll look more closely at the five funds in the ARK Invest lineup -- and which one has done the best.
Autonomous Technology & Robotics
ARK Autonomous Technology & Robotics ETF (NYSEMKT:ARKQ) is the smallest of Cathie Wood's active ETFs, with assets of about $4.2 billion. But it still manages to pack a big punch. The ETF has turned a $10,000 investment last year into $23,060.
As its name suggests, the scope of this ETF is broad enough to incorporate a range of industries and applications, including 3-D printing technology, space exploration, and robotics and automation. Yet Wood's clear focus for the fund has been autonomous transportation, with top-two holdings Tesla and Baidu both involved in exploring self-driving technology.
Fintech Innovation
ARK Fintech Innovation ETF (NYSEMKT:ARKF) is also a relatively minor player in the ARK Invest lineup, with roughly $4.7 billion in assets under management. But investors have enjoyed strong performance even as many traditional financial companies have done poorly over the past year. Investors who put $10,000 into ARK Fintech a year ago now have shares worth $23,410.
Wood's portfolio of fintech innovation companies has Square as its biggest holding, but fellow electronic payments specialists PayPal Holdings is also in the top three. Real estate tech specialist Zillow Group and cryptocurrency banking specialist Silvergate Capital help to diversify the ETF away from its digital wallet focus, adding exposure to equally interesting high-growth areas.
ARK Innovation
ARK Innovation ETF (NYSEMKT:ARKK) is by far the largest ARK Invest ETF. It has almost $28 billion in assets, having risen by more than $10 billion just since the beginning of the year. It has also turned a $10,000 investment this time last year into $26,000.
If you only invest in one ARK Invest fund, then ARK Innovation is the logical place, because it includes stock ideas from all four of ARK Invest's other active ETFs. You can see that in the fund's top holdings, which include Tesla and Baidu from the automation ETF, Square and Zillow from fintech, Roku from next-generation internet, and Teladoc Health from genomic revolution.
Next Generation Internet
Investors in ARK Next Generational Internet ETF (NYSEMKT:ARKW) have gotten even stronger returns. A $10,000 investment has grown to $26,440 in just one year, and the fund has attracted assets of more than $9.4 billion.
Next Generation Internet concentrates on companies trying to use cloud computing, data analytics, and artificial intelligence to gain key business insights, as well as cybersecurity and blockchain companies. In that light, Tesla might seem an odd No. 1 holding, but it fits in due to its artificial intelligence research. You'll also find an investment in a fund that owns cryptocurrency, as well as Square, remote medicine pioneer Teladoc Health, and connected TV up-and-comer Roku in its list of top stocks.
Genomic Revolution
Last but definitely not least, the ARK Genomic Revolution ETF (NYSEMKT:ARKG) has treated its shareholders the best of all ARK Invest funds. A $10,000 investment has grown to $29,330 since February 2020. The fund has grown to more than $12.7 billion in assets under management.
As its name suggests, Genomic Revolution specializes in companies pursuing advances in molecular diagnostics, targeted therapeutics, bioinformatics, and other areas concentrating on studying genetics and genomes. Teladoc is by far the largest holding, but biotechs Pacific Biosciences of California and Twist Bioscience aren't far behind.
Expect volatility on the path to long-term returns
As you can see in the chart above, though, earning these extraordinary returns wasn't easy. All of these funds lost 20% or more during the bear market in March 2020 before bouncing back. Without a disciplined approach, you might've missed out on these gains even if you'd been fortunate enough to invest a year ago.
Wood's investing style isn't for the meek, but it can have big payoffs. With a continuing mission to find the best new ideas for future investing trends, ARK Invest hopes to keep up its positive momentum in 2021 and beyond.
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February 18, 2021 at 05:05PM
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If You'd Invested $10,000 in Cathie Wood's ARK Invest ETFs a Year Ago, This Is How Much Money You'd Have Now - Motley Fool
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