Daily ETF Watch: ARK Launches Funds

Newcomer rolls out two actively managed, innovation-focused ETFs.

A new entrant to the ETF arena is rolling out two ETFs today focused on innovative technologies.

The ARK Industrial Innovation ETF (ARKQ) and ARK Web x.0 ETF (ARKW) are both actively managed and invest in U.S.-listed securities falling within their respective themes.

ARKQ targets companies developing new products, technologies, services and research that relate to “disruptive innovation” in the fields of robotics, autonomous vehicles, infrastructure development, innovative materials, nanomaterials, alternative energy sources, energy storage, 3D printing and space exploration, according to a fact sheet.

ARKQ’s top holdings include Google, Autodesk, Fanuc, Monsanto and Stratasys. It typically has 45-55 holdings in its portfolio.

ARKW, on the other hand, is focused on companies that are involved in the shift of technology infrastructure away from software and hardware to the cloud. The holdings are involved—either as providers or users—in the areas of cloud computing, cryptocurrencies, digital education, big data, wearable technology, and services, data mining and social media, among other categories, a fact sheet said.

The fund’s top holdings include athenahealth, Apple, Facebook, Salesforce.com and Twitter. It usually has 40-50 securities in its portfolio.

Both new ETFs are managed by ARK Investment Management’s founder, CEO and chief investment officer, Catherine Wood, who was previously chief investment officer of global thematic strategies at AllianceBernstein.

ARKQ and ARKW come with expense ratios of 0.95 percent.

Arrow To Add DWA Fund
Tomorrow, Arrow Funds will be rolling out its second ETF. The go-anywhere Arrow DWA Tactical ETF (DWAT) will be actively managed and can invest in equity and fixed-income securities and alternative assets, according to its prospectus. However, it will primarily invest in other exchange-traded funds.

DWAT’s scope includes a wholly owned subsidiary domiciled in the Cayman Islands through which it can invest in commodity futures and benefit from certain corporate income tax exemptions. The prospectus notes that the fund can shift its portfolio entirely into equities or fixed income, if necessary, but that it can only invest up to 90 percent of the portfolio in alternative assets.

The fund’s subadvisor is Dorsey, Wright & Associates, and the fund’s strategy is based on the Dorsey Wright Relative Strength Global Macro Model, a press release said. DWAT will come with an expense ratio of 1.52 percent.

Arrow launched its only other fund, the index-based Arrow Dow Jones Global Yield ETF (GYLD), in May 2012, and the fund’s assets under management are approaching $200 million. Interestingly, GYLD is also a multi-asset-class fund, like DWAT, and invests in equities, debt, real estate and alternatives as part of its yield-seeking strategy.