ETF Of The Year
WINNER: ARK Innovation ETF (ARKK)
The ETF of the Year category is really designed to recognize ETFs that have carried out their stated goals particularly well during the year in question. For 2017, that was the Ark Innovation ETF (ARKK), an actively managed fund that focuses on capturing the performance of companies involved in “disruptive innovation.”
The fund, which launched in the last quarter of 2014, was up more than 87% last year, a rather stunning return that was mostly unrivaled if you don’t count its sister fund, the ARK Web x.0 (ARKW), which has a primary focus of internet-related disruptive innovation.
ARKK has a broader focus that encompasses ARKW’s objective; it targets disruptive innovation not only in relation to the shift to cloud-based and mobile technology, but in the fields of genomics and industrial innovation. In addition to ARKW, ARKK has two other smaller sister funds narrowly targeting those two additional investment themes. Those funds also exhibited strong performance
during the year, both up well over 40%.
ARKK’s performance in 2017 was at least partially driven by its allocation to the Bitcoin Investment Trust and the notorious “FANG” stocks (Facebook, Apple, Netflix and Google/Alphabet) that have recently had so much influence on the direction of the U.S. stock market.
ARKK and its sister funds are also anomalies among ETFs in that they have as a group outperformed comparable passively managed ETFs during 2017, which ironically was a year when plain-vanilla ETFs saw the lion’s share of the inflows as market indexes surged.
With its more than 90% allocation to the U.S., ARKK has more than doubled the annualized three-year performance of the SPDR S&P 500 ETF Trust (SPY), defying expectations for an actively managed fund.