4 ETFs on the Cutting Edge: Data, Genomics, Robotics and Fintech

Jim Woods is a leading growth stock expert and a specialist in exchange-traded funds. The editor of The Deep Woods -- and a contributor to MoneyShow.com -- reviews four ETFs from the ARK Funds family that are focused on cutting edge opportunities in the Internet, robotics, genomics and fintech. The ARK Next Generation Internet ETF is an actively managed fund with a broad mandate to invest in companies that its managers have identified as benefiting from an infrastructure shift away from hardware and software toward cloud and mobile. ARK Next Generation Internet's wide-ranging directive does not limit its investments by geography or by industry. Instead, the fund's managers are tasked with identifying companies they view as engaged in the next generation of Internet evolution. Broadly speaking, the fund's managers appear focused on big, recognizable buzzwords such as internet of things, cloud computing, digital currencies and wearable technology. Stocks of companies that fit ARKW's investment profile are expected to benefit from shifting technology infrastructure to the cloud. That transition will enable mobile, local and new services, including those provided by companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things and social distribution and media. These companies may develop, produce or enable cloud computing and cyber security, e-commerce, big data, artificial intelligence (AI), mobile technology, internet of things, social platforms, blockchain and peer-to-peer (P2P) computing. The fund is most heavily weighted in the United States at 89%. Its top holdings include Tesla Inc. , Square and Roku . The fund has $454.72 million in assets under management, 44 holdings and a 0.08% average spread. Its expense ratio is 0.74%. The fund's shares trade around $64 and have paid a 9.46% distribution yield for the past 12 months. While the fund's focus may be appealing for investors who believe in the value of these new technologies, portfolio implementation is a more difficult task. Most of the companies that are developing these advancements are huge corporations whose nascent technologies make up only a small fraction of total revenues. As such, it is very difficult to get pure-play access to ARKW's targeted technologies. So, be sure to confirm that the fund's holdings -- not just its thesis -- align with your view of the space. While robots have long held sway in the domain of science fiction, their role in the automation of jobs formerly performed by humans has cast a specter over the world's developed economics and will remain a salient political and economic question for a long time to come. On the other hand, the disruptive innovation driven by the Fourth Industrial Revolution also has given new opportunities for investors. For instance, the ARK Autonomous Robotics ETF provides investors with exposure to companies around the world that will benefit from new scientific advancements in the areas of energy, materials, transportation, automation and manufacturing. One of the most crucial differences between ARKQ and its most direct competitor Robo Global Robotics and Automation Index ETF is that while ROBO generally focuses on companies that develop or benefit from automation, most of the companies in ARKQ's portfolio are involved with the fields of autonomous transportation, robotics and automation, 3D printing, energy storage and space exploration. The ARK Invest fund's top holdings include Tesla , Stratasys Ltd. , Proto Labs , Materialise NV-ADR , Xilinx , Nvidia and AeroVironment . This fund's performance has been solid in both the short run and the long run. As of March 4, ARKQ is up 10.7% over the past three months. It currently is up 1.94% year to date. The fund has $183.81 million in assets under management and an expense ratio of 0.75%, meaning that it is more expensive to hold in comparison to other exchange-traded funds (ETFs). In short, while ARKQ does provide an investor with a chance to profit from the world of autonomous robotics, the sector may not be appropriate for all portfolios. Thus, interested investors always should conduct their own due diligence and decide whether the fund is suitable for their investing goals. Meanwhile, the increasing ability of human beings to treat formerly lethal diseases has had a massive effect on the quality of our lives over the past century. However, many damaging genetic diseases such as Tay-Sachs and cystic fibrosis have remained outside of this pattern. While certain drugs and treatments for these conditions do exist, they only can ameliorate the symptoms, not cure them. Yet, the fact that the genomics industry is working to remedy this situation by developing gene-editing tools like CRISPR also provides new opportunities for investors. For instance, the ARK Genomic Revolution ETF provides investors with exposure to companies around the world that are involved in the genomics revolution, regardless of sector. As of right now, most of its holdings are in U.S health care companies, most of which (71.93%) are in the biotech sector. Its other top sectors include advanced medical equipment and technology (12%), medical equipment, supplies and distribution (6.49%), health care facilities & services (4.21%) and pharmaceuticals (4.13%). Its top holdings include Invitae Corp. , Illumina , CRISPR Therapeutics AG , Intellia Therapeutics , Compugen Ltd. , Editas Medicine and Teladoc Health . This fund's performance has been solid in both the short run and the long run. As of March 4, 2020, ARKG is up 5.76% over the past month and up 2.36% over the past three months. It currently is up 4.68% year to date. The fund currently has $514.19 million assets under management and an expense ratio of 0.75%, meaning that it is more expensive to hold in comparison to other ETFs. While ARKG does provide an investor with a chance to profit from the world of genetics, the sector may not be appropriate for all portfolios. Interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals. Financial technology, or fintech, is a relatively new and growing part of the market. It features interesting companies that transform the way in which we engage in transactions, as well as how financial processes are handled on a business-to-business level. One way to gain exposure to this theme is through the actively managed exchange-traded fund ARK Fintech Innovation ETF . This fund seeks to be on the cutting edge of new technology in this space. According to ARK Invest, fintech innovation companies include those involved in transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer-facing platforms and new intermediaries, among other areas. All these themes, of course, have the potential to create hugely profitable ventures. While the blockchain craze has largely died down, there still are companies that are legitimately engaged with the technology as a source of profit. Financial technology may be a more interesting theme than companies that have, as was popular a few years ago, simply appended blockchain to their names to attract investors. The largest position in this fund by far is Square , the maker of small card readers for small businesses. The company's technology has become ubiquitous over the past few years, and shareholders have profited handsomely. This fund is up by about 16% over the last year. It currently trades at a small premium to net asset value (NAV), as usual, and has an expense ratio of 0.75%. With assets under management of just $83 million, this fund falls below my recommended threshold for investment, but its strategy is an interesting one that merits bringing to your attention. ARKF has powered upward since October, leaving its moving averages in the dust. Top holdings for this fund include Square, Tencent Holdings , Apple , MercadoLibre , 4.48% and PayPal Holdings . New investment themes for investors to consider are always interesting. If you believe that the frontier of fintech is a promising source of further upside, ARK Fintech Innovation ETF may be a fund worth considering for possible investment. Subscribe to The Deep Woods here.

4 ETFs on the Cutting Edge: Data, Genomics, Robotics and Fintech

These ARK Funds family funds are focused on new opportunities and investment themes.

Columnist Conversation

This Weekend on Real Money

Friday Morning Fibocall for 10/22/2021

10-Year Note Yields

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.