ARK ETFs Erase 2021 Gains, Assets Hold

March 08, 2021

It was bound to happen. After an unrelenting boom over the past year that sent prices of its ETFs and its assets under management into the stratosphere, ARK Invest finally faced some turbulence.

The ETF issuer’s flagship fund, the ARK Innovation ETF (ARKK) tumbled 25.2% between Feb. 12 and March 5, more than 10 times the 2.4% loss of the S&P 500 in the same period.

An across-the-board wipeout in the high growth stocks that make up ARK’s exchange-traded funds pushed three of its seven ETFs into the red for the year:

YTD Returns

 

The flagship ARKK, a $22.9 billion fund that holds a cross section of high-growth stocks from multiple sectors, is the second-worst performer of the bunch, with a year-to-date loss of 6%. That’s quite the turnaround from when the fund was up 25.8% in mid-February.

Yet even as the ETF has tumbled, investors haven’t headed for the hills. Far from it; year-to-date net inflows for ARKK total $6 billion. That includes more than $700 million of inflows since the fund peaked last month—though the pace of new buying has slowed from the torrid pace of earlier this year.

ARKK’s portfolio contains a sampling of stocks from each of the issuer’s other more-focused funds. It hits on themes like AI, autonomous vehicles, fintech, DNA sequencing, robotics and 3D printing.

Current top holdings include Tesla, Square, Roku, Teladoc and Baidu, with weightings ranging from 3.6% and 10%.

Recent losses notwithstanding, ARKK’s focus on disruptive tech has served it extremely well. It’s up 149% over the past year, and 586% over the past five years. At the same time, assets under management in the ETF have grown tenfold in just the past 11 months.

'ARKG'

The aforementioned ARKK is ARK Invest’s most diversified ETF. Its six other exchange-traded funds are more targeted, offering investors potent exposure to the company’s favored technological themes.

The ARK Genomic Revolution ETF (ARKG) has been the most popular among those funds, with assets totaling $10 billion, including net inflows of $3.2 billion this year. That said, the fund has hit a rough patch recently, registering outflows in seven of the past nine sessions for total net redemptions of $1.1 billion in the period.

It’s not hard to see why that is. The fund is down 8.7% year-to-date, making it this year’s worst-performing ETF in ARK’s suite. At its high in February, ARKG was up more than 20%.

ARKG is a health care fund at its core, but one with a bias toward genomics-related stocks. Companies targeted include those related to gene editing, bioinformatics, precision medicine, stem cells, agricultural biology and more.

The vast majority of ARKG’s portfolio consists of drugmakers—biotech and pharma companies—but not all of it. For example, the fund’s top holding is currently the telemedicine company Teladoc. TDOC, with its 7.3% weighting, is followed by Regeneron, Exact Sciences, Pacific Biosciences and Novartis, each with weightings of more than 4%.

Even after its recent plunge, ARKG is still up 154% over the past year, and 423% over the past five years.

'ARKW'

The third-largest of the ARK ETFs is the ARK Next Generation Internet ETF (ARKW). This fund holds 8.3 billion in assets under management and year-to-date inflows of $2.4 billion (incidentally, every one of ARK’s seven ETFs has seen net inflows this year). The picture is a bit different over the past nine sessions; in that period, the fund registered outflows in all but one day, for net redemptions of $719 million in the period.

Just like the already-mentioned ARKK and ARKG, ARKW is down this year. With a 0.2% loss, the ETF has completely wiped out what was as much as a 28% gain in February.

ARKW’s focus is on the companies you might think of when you think of technology: software firms, hardware firms, social media firms, etc. These stocks tend to touch on areas like cloud computing, cybersecurity, e-commerce, big data, AI and blockchain.

The top holdings of ARKW are currently Tesla, Square, the Grayscale Bitcoin Trust, Teladoc and Roku, with position sizes ranging from 3.9% to 10%.

Over the past year, ARKW is up 161%; over the past five years, it’s up 769%, making it the best performer in ARK’s suite over both those time periods.

Other ARK ETFs

While ARK’s three largest ETFs are all down this year (as of March 5), its four other exchange-traded funds are hanging on to positive returns. That includes the ARK Fintech Innovation ETF (ARKF), with a 2.5% gain; the ARK Israel Innovative Technology ETF (IZRL), with a 4% gain; the ARK Autonomous Technology & Robotics ETF (ARKQ), with a 5.4% gain; and the 3D Printing ETF (PRNT), with a 15.7% gain.

ARKF and ARKQ are both actively managed ETFs (just like ARKK, ARKG and ARKW), while IZRL and PRNT are index ETFs.

Fees for the index funds are a bit cheaper, at 0.66% and 0.49%, respectively, for PRNT and IZRL, compared to 0.75% for ARKK, ARKG, ARKF and ARKQ. ARKW has the highest expense ratio, at 0.79%.

That said, most investors buying the ARK funds aren’t that concerned about annual fees. They buy the ETFs on the expectations of enormous outperformance, and so far, ARK has delivered in spades. Returns for the ARK ETFs can be seen below:

 

Ticker Fund YTD Return (%) 1-Yr Return (%) 5-Yr Return (%)
ARKK ARK Innovation ETF -6.0 149.1 594.5
ARKG ARK Genomics Revolution ETF -8.7 154.3 436.2
ARKW ARK Next Generation Internet ETF -0.2 160.6 771.2
ARKF ARK Fintech Innovation ETF 2.5 130.1 N/A
ARKQ ARK Autonomous Technology & Robotics ETF 5.4 138.2 374.7
PRNT 3D Printing ETF 15.7 108.0 N/A
IZRL ARK Israel Innovative Technology ETF 4.0 63.8 N/A

Data measures total returns. YTD Return is for the period ending March 5, 2021.

While they’ve sold off in recent weeks along with their sister ETFs, ARKF, ARKQ, IZRL and PRNT are still sporting positive returns for 2021.

ARKF is designed to target financial technology, or fintech, stocks. Top holdings are Square, PayPal, Zillow, Intercontinental Exchange and Tencent.

ARKQ’s focus on autonomy and robotics has led it to overweight Tesla, Baidu, Trimble, Deere and JD.com, among others.

IZRL is a broad “disruptive innovation” fund—just like ARKK—but one that exclusively targets Israeli companies. Perion Network, E&M Computing, InterCure, Wix.com and Gilat Satellite Networks top the holdings list for the fund.

Meanwhile, PRNT is an ETF that captures the 3D printing space, holding shares of ExOne, HP, Renishaw, Straumann Holding and Microsoft, in addition to others.

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

Compared with the other ARK funds, PRNT and IZRL have delivered the smallest returns over the past few years, but this year they’ve outperformed. Especially PRNT—it’s up 15.7% year-to-date after being up as much as 58.8% at its peak in February.

PRNT holds several small stocks that have absolutely skyrocketed this year, boosting the ETF’s gains. For example, top holding ExOne is up 200% year-to-date (it was as much as 580%).

Investors have taken notice. PRNT’s assets under management have shot up fourfold this year thanks to inflows of $487 million.

At the same time, IZRL’s assets have also grown more than fourfold on the back of year-to-date inflows of $304 million.

Inflows for ARKQ and ARKF have also been strong—$2.4 billion and $1.8 billion, respectively.

Together, the seven ARK ETFs now have $52.8 billion in assets under management, enough to make ARK the ninth-largest ETF issuer.

Email Sumit Roy at [email protected] or follow him on Twitter @sumitroy2

Find your next ETF

Reset All