The Dow Jones industrial average hit a record high on Wednesday, and the S&P 500 has extended its winning streak to six days of gains. The Nasdaq slowed down on Wednesday, largely due to tech, but as tech has been mixed recently, it’s become more of a stock-picker’s market. While ARK Invest funds took a hit in September, they are poised to make a comeback.
ARK Invest funds have been selectively tech heavy, which explains recent movement relative to interest rates. Taking into account recent moves by the Federal Reserve, these funds are headed for boom or bust. Year-over-year comparisons on a few of these funds suggest weakness. Right now the question is where ARK Invest is going and if they can back it up.
Here we’re looking at ARK Innovation ETF (NASDAQ: ARKK). As it stands now, this fund underperformed the broad-based indexes during the third quarter. Among the top detractors were Roku Inc. (NASDAQ: ROKU) and Zoom Video Communications Inc. (NASDAQ: ZM).
According to the report:
Zoom detracted from performance following an earnings report that pointed to a deceleration in the growth of its core Meetings product in the SMB/individual segment. That said, revenues increased a better than expected 54% on a year-over-year basis against a blistering 355% surge during the depths of the coronavirus crisis last year. Moreover, the number of Zoom customers with more than 10 employees increased 36%. Meanwhile, with roughly two million seats, Zoom Phone appears to be gaining momentum. While higher churn from lower-end markets is not surprising as the global economy reopens, ARK believes that Zoom is likely to overcome the slowdown with share gains in the massive enterprise communications space as it evolves what appears to be the most technologically advanced offering for video conferencing and PBX.
Among the top contributors to the fund were Tesla Inc. (NASDAQ: TSLA), Unity Software (NYSE: U) and Sea Ltd. (NYSE: SE).
For reference, here is the portfolio composition for this fund:
| Element | Exposure |
|---|---|
| Cloud Computing | 13.0% |
| Digital Media | 11.9% |
| E-Commerce | 10.9% |
| Gene Therapy | 6.0% |
| Big Data & Machine Learning | 5.6% |
| Internet of Things | 5.4% |
| Blockchain & P2P | 4.9% |
| Mobile | 4.8% |
| Instrumentation | 4.6% |
| Bioinformatics | 4.5% |
| Molecular Diagnostics | 4.4% |
| Robotics | 4.0% |
| Next Generation Oncology | 3.5% |
| Energy Storage | 3.3% |
| Social Platforms | 2.4% |
| Autonomous Vehicles | 2.4% |
| Development of Infrastructure | 2.0% |
| Beyond DNA | 1.8% |
| Targeted Therapeutics | 1.7% |
| Space Exploration | 1.5% |
| 3D Printing | 1.2% |
Also, here are the top 10 holdings:
| Company | Weight |
|---|---|
| TESLA | 10.2% |
| TELADOC HEALTH | 5.6% |
| ROKU | 5.6% |
| COINBASE GLOBAL – CLASS A | 5.1% |
| UNITY SOFTWARE | 5.0% |
| ZOOM VIDEO COMMUNICATIONS – A | 4.5% |
| SQUARE – A | 4.0% |
| SPOTIFY TECHNOLOGY | 3.8% |
| SHOPIFY – CLASS A | 3.8% |
| TWILIO – A | 3.3% |
| Total | 50.9% |
The exchange-traded fund recently closed at $118.70, in a 52-week range of $89.39 to $159.70. Over the past quarter, net asset value for the ETF dropped 15.5%, and the market price tracked practically the same. Year to date, the ETF is down 11%, and over the past year it is up about 22.1%.
Note that Catherine Wood, the CEO and CIO of ARK Investment Management, is a minority and nonvoting shareholder of 24/7 Wall St., owner of 247wallst.com.
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