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Should You Invest in the ARK Innovation ETF (ARKK)?

Zacks Equity Research
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Looking for broad exposure to the Technology - Broad segment of the U.S. equity market? You should consider the ARK Innovation ETF (ARKK), a passively managed exchange traded fund launched on 10/31/2014.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.

Index Details

The fund is sponsored by Ark Investment Management. It has amassed assets over $818.45 M, making it one of the average sized ETFs attempting to match the performance of the Technology - Broad segment of the U.S. equity market.

This ETF is active and does not track a benchmark.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.75%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.20%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Intellia Therapeutics Inc (NTLA) accounts for about 7.01% of total assets, followed by Tesla Inc (TSLA) and Stratasys Ltd (SSYS).

The top 10 holdings account for about 48.29% of total assets under management.

Performance and Risk

Year-to-date, the ARK Innovation ETF return is roughly 21.28% so far, and was up about 51.28% over the last 12 months (as of 06/29/2018). ARKK has traded between $28.40 and $48.37 in this past 52-week period.

The ETF has a beta of 1.50 and standard deviation of 22.31% for the trailing three-year period, making it a medium risk choice in the space. With about 47 holdings, it has more concentrated exposure than peers.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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ARK-INNOVATION (ARKK): ETF Research Reports
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
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Intellia Therapeutics, Inc. (NTLA) : Free Stock Analysis Report
 
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