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2 Ark ETFs Offering Good Value After This Year’s Selloff

Published 07/26/2022, 04:38 PM
Updated 07/09/2023, 06:32 PM
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  • Cathie Wood announced the upcoming closure of the ARK Transparency ETF
  • Despite declines, investors continue to follow Wood’s holdings closely
  • Consider 2 Ark Invest ETFs that offer better value compared to a year ago
  • After causing great excitement during the pandemic, many stocks held in Cathie Wood’s Ark Invest exchange-traded funds (ETFs) have come under fire since January.

    So far in the year, dramatic spikes in inflation, rising interest rates, and geopolitical concerns have taken a heavy toll on growth stocks. Recent data from Bloomberg Intelligence highlights Wood’s funds saw “the most significant decline of the 25 largest US issuers…but Wood and Ark have a loyal following.”

    Meanwhile, Ark Invest recently announced the upcoming closure of the ARK Transparency ETF (NYSE:CTRU). The fund tracked the Transparency Index, the 100 most transparent companies compiled by Transparency Global.

    In a press release, Ark Invest reported that Transparency Global would no longer calculate the Transparency Index, and thus it could not find a suitable replacement. ARK Transparency ETF was launched in December 2021 and has lost close to a third of its value so far.

    Despite the upcoming closure of the CTRU fund, Wood’s followers are keeping a close eye on other ETFs offered by Ark Invest. Today, we introduce two of those funds.

    1. ARK Fintech Innovation ETF

    • Current Price: $17.69
    • 52-week range: $14.64 - $55.28
    • Expense ratio: 0.75% per year

    Metrics suggest, by 2026, the global financial technology (fintech) market size will approach $325 billion. Such an expansion from the current levels would mean a compound annual growth rate (CAGR) of over 25% between 2022 and 2027.

    The first fund we will be discussing is the ARK Fintech Innovation ETF (NYSE:ARKF), which invests in names that are leading the developments in fintech. The fund started trading in February 2019.

    ARKF Weekly

    ARKF, which tracks the MSCI World Index, typically holds between 35-55 stocks. With regards to sub-sector breakdown, we see Transaction Innovations (31.3%), Customer Facing Platforms (18.5%), The New Intermediaries (15.9%), Risk Transformations (14.3%), and others.

    Close to 70% of the companies come from North America. Next, we see businesses from South & Central America, Asia-Pacific, Africa/Middle East, Western Europe, and Central Asia.

    The top 10 stocks in the portfolio represent almost two-thirds of net assets of $811.2 million. Among them are Block (NYSE:SQ), which offers a large payments ecosystem; e-commerce platform provider Shopify (NYSE:SHOP); cryptocurrency exchange Coinbase Global (NASDAQ:COIN); cloud communications platform Twilio (NYSE:TWLO); and no-coding automation platform Uipath (NYSE:PATH).

    ARKF saw a record high in February 2021. Since then, investors have been concerned about valuations in the industry. As a result, the ETF is down around 56.6% year-to-date (YTD). Despite the recent declines, many companies in ARKF are seeing impressive top-line growth. Long-term investors should find value in these fintech leaders around these levels.

    2. ARK Genomic Revolution ETF

    • Current Price: $36.71
    • 52-week range: $26.38 -$89.11
    • Expense ratio: 0.75% per year

    Cathie Wood pays close attention to developments in genomics, or the “study of the body’s genes, their functions and their influence on the growth, development and working of the body.” Between 2021-2028, the global genomics market is forecast to grow at a CAGR of well over 19% and reach almost $95 billion in 2028.

    Next up on our list of funds is the ARK Genomic Revolution ETF (NYSE:ARKG). The fund was first listed in October 2014, and assets stand at $2.34 billion. It invests in a diverse range of companies that make genomics a significant part of their businesses. Some of the technologies in focus include CRISPR, bioinformatics, molecular diagnostics, targeted therapeutics, oncology, stem cells, and agricultural biology.
    ARKG Weekly

    ARKG currently holds 40 stocks. Health care names have the largest slice, with 91.9%, followed by information technology (5.4%) and materials (2.5%).

    Over 95% of the companies come from North America. Close to half of the portfolio is concentrated in the leading 10 stocks.

    Cancer diagnostics company Exact Sciences (NASDAQ:EXAS); Teladoc Health (NYSE:TDOC), which offers virtual healthcare services; Ionis Pharmaceuticals (NASDAQ:IONS), known for its spinal muscular atrophy drug Spinraza; Fate Therapeutics (NASDAQ:FATE), which develops cellular immunotherapies, especially against cancer; and gene-editing company Crispr Therapeutics (NASDAQ:CRSP) make up for the most significant part of the fund.

    ARKG saw a 52-week high in early August 2021. But it has lost 57% in the past 52 weeks and 40% since January. Those investors looking to include a biotech ETF, especially one that focuses on genomics, should do further due diligence on ARKG.

    Disclaimer: On the date of publication, Tezcan Gecgil, Ph.D., did not have any positions in the securities mentioned in this article.

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