US financial services provider ARK Invest has set itself the goal of enabling methodical investment in the digital revolution. To that end it launched five ETFs: ARK Innovation, ARK Autonomous Technology & Robotics, ARK Next Generation Internet, ARK Genomic Revolution and ARK Fintech Innovation. That the investment team is doing a good job is evident not least this year. According to an analysis by the financial platform Seeking Alpha, the ETF quintet from ARK Invest are among the ten best ETFs in 2020. The investment vehicle is not just demonstrating its outperformance qualities in the short term, however: it has been in the fast lane ever since it was launched. This is exemplified by the broadly diversified ARK Innovation ETF, which covers a large range of innovative technologies from cloud computing through the internet of things to gene therapy and blockchain and can boast an annualised growth rate of just under 40% over the last five years. The S&P 500, by contrast, managed to rise by just 14% p.a.
The other ARK ETFs have also pulled away from the market as a whole in recent years. Although the youngster of the ETFs, the ARK Fintech Innovation, has a significantly shorter track record – the product was only launched in April 2019 – its performance since then likewise speaks for itself. The ETF put on a proud 86% in value over a 12-month view, beating the S&P 500 by a huge 70 percentage points. The largest holding in the fund at the moment is mobile payment specialist Square, which accounts for rather more than one tenth. The company is enjoying a dynamic growth trajectory and managed to increase its earnings per share to 34 cents in the third quarter of 2020 alone. That was not only 59% more than in the previous year, but twice as much as analysts had expected. "Cash", the financial app that enables real-time transfers, among other features, was particularly successful. According to ARK Research, the market for digital wallets in the USA will continue to grow exponentially in the new few years. The experts predict a value of USDbn 800 by 2024, 27 times higher than today.
While the ARK Innovation, Next Generation Internet and Genomic Revolution ETFs managed to as much as double in the last twelve months, the ARK Autonomous Technology & Robotics ETF brings up the rear with a – still remarkable – growth rate of 80%. The fund concentrates primarily on technological progress in the transport, automation, energy and manufacturing sectors. Aerospace research also plays a role in the investment approach, currently making up 4.8% of the fund. The largest sector by theme is formed by companies involved in autonomous driving. According to ARK, the market for autonomous carpooling will climb from more than USDtn 1 today to USDtn 5 by 2024, reaching as high as USDtn 9 in 2029. The fund takes this trend into account: the largest single holding is the Californian car-maker Tesla, which is now worth more than all European, American and many Japanese motor manufacturers put together.
Each themed ARK Invest ETF thus covers a wide range of promising sectors of the future. However, buying all funds on the NYSE in the USA would come with very high transaction costs. Leonteq has the perfect solution for future-oriented investors to hand: SIX-listed tracker certificates on the "Disruptive Innovation Index". It invests with equal weighting in the five actively managed ARK ETFs. The dividends of the index components are not lost, but are instead reinvested net in the respective ETFs. The annual fee for the tracker is 0.75% p.a. The participation instruments, which reflect the underlying 1:1, are offered in the two currency tranches of CHF and USD. The equal weighting of the five underlying stocks is retained through annual reweighting within the index.
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