- (1:00) – Analysis of ARK Invest’s performance in 2021
- (12:30) – exposure to high aviation technology stocks
- (16:00) – Will inflows affect how Kathy Woods is invested going forward?
- (22:20) – Learning from the Fidelity Magellan Collaborative
- (30:50) – Episode summary: ARKK, ARKG, CTRU, QQQ, QQQM, XBI, FMAG
Welcome to Episode 297 of the Zacks Market Edge Podcast.
Each week, guests will join host and Zacks stock strategist, Tracey Ryniec to discuss the hottest investing topics in stocks, bonds, and ETFs and how they affect your life.
This week, Tracy talks with Director of Zacks ETF Research Nina Mishra, who is also the editor of the Zacks ETF Investor Portfolio, and host of the ETF Spotlight podcast, about Cathy Wood’s ETFs.
ARK Innovation and ARK Genomic Revolution ETFs have been some of the hottest ETFs of the past few years. But both ARK Innovation and ARK Genomic Revolution ended up in the red in 2021.
Where are they headed from here in 2022?
Should investors take a look at ARK Invest’s ETFs or should they just stick to indices like the Nasdaq 100 (QQQM) and SPDR S&P BioTech ETF (XBI)?
ARK Invest and Cathy Wood ETFs
1. ARK Innovation ETF ARKK
In 2020, the ARK Innovation ETF, Cathie Wood’s flagship ETF, was the top US ETF. Big bets on “pandemic winners” such as Zoom Video and Teladoc drove the ETF up 150%.
But despite taking a 10% position in Tesla, which gained nearly 50% in the year, ARK Innovation finished 2021 down about 24%.
Since its inception on October 31, 2014, the ARK Innovation ETF has generated a return of 374%, easily beating the S&P 500 over that period, which is up 138%.
Will ARK Innovation be back in shape in 2022?
2. ARK The genome revolution ARKG
ARK Genomic Revolution is as old as ARK Innovation, with its debut on October 31, 2014. It has also made an impressive 2000 with gains of over 200%.
But ARKK also returned to Earth in 2021, dropping by more than 30%. However, since inception, the ARKG Index is up over 200% against the S&P 500, up around 138%.
ARKG also has Teladoc, like ARKK, in the top five, which is down 54% in 2021. Other notable holdings, like Exact Sciences, are also down double digits for the year.
Will its innovative healthcare companies make a recovery in 2022?
3. ARK Transparency ETF CTRU
ARK Invest is not resting on its achievements as it continues to launch new ETFs, including the ARK Transparency ETF, which was launched in December 2021.
But it doesn’t use Cathie Wood’s expertise, and instead is designed by CTRU to track the Transparency Index, a list of the 100 most transparent companies.
So far, few investors have been interested in CTRU because it has taken so little money since its launch.
Are investors only interested in actively investing in ARK or will CTRU eventually become an investor favourite?
4. Invesco Nasdaq 100 ETF QQM
If you’re trying to lower your fees, Nina points out that QQQM, the “mini” Nasdaq 100 index, mostly tracks the ARKK ETF into 2020.
QQQM has an expense ratio of only 0.15% while ARKK’s expense ratio is 0.75%.
It recommends that traders use QQQ while long-term investors use QQQM, as it has a lower expense ratio.
While ARKK outperformed in 2020, it was the opposite in 2021 with QQQM gaining 10.7% over the past six months but ARKK down 24.3%.
Should investors stick to only the QQQM Index?
5. SPDR S&P Biotech ETF XBI
Similarly, SPDR S&P Biotech ETF has tracked with ARKG over the years as well.
ARKG has outperformed in 2020, but XBI has reclaimed the crown over the past six months, dropping just 15.5% while ARKG is down 34.5% over that period.
XBI has a spending ratio of just 0.35% versus 0.75% ARKG.
For long-term investors to buy and hold, the expense ratio can really increase.
XBI has equal weight, so it doesn’t get a higher concentration among a few names, as it does at ARKG but ARKG investors are betting on Cathie’s expertise and research.
Will ARKG get its magic back in 2022?
What else should you know about ARK and 2022 ETFs?
Listen to this week’s podcast to find out.
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SPDR S&P Biotech ETF (XBI): ETF Research Reports
ARK Innovation ETF (ARKK): ETF Research Reports
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports
ARK Transparency Foundation (CTRU): ETF Research Reports
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