After a historic November, the best month the market has seen since January 1987, I found an interesting Exchange Traded Fund trend; one ETF manager has three of the top ten best performing ETFs of 2020. Furthermore, what makes this one fund manager even more impressive is this performance when you run the screener and leave leveraged funds in play, even though none of the ARK Invest funds are leveraged products themselves.
So not only are these three funds not leveraged and therefore exposing you to more risk than you may want, but they are beating other leveraged funds. One of the main ways ARK is likely to show excellent results in 2020 is its different way of thinking about investing. They state on their website this belief.
“Not Your Traditional Investment Manager
The world is changing rapidly. While traditional investors seek safety in benchmarks and passive strategies, ARK believes this behavior is counterproductive. Innovation is causing disruption and the risks associated with the traditional world order are rising. We strive to invest at the pace of innovation”
The fund managers certainly see themselves as a little different than others on Wall Street, and this year has undoubtedly proven what they are doing is beating the rest of the pack.
So, how great was the performance of Ark’s fund thus far?
The ARK NEXT Generation Internet ETF (ARKW) was the sixth-best performing ETF thus far in 2020 as it’s up 130% year-to-date. The ARK Genomic Revolution ETF (ARKG) was the seventh-best performing ETF thus far in 2020 and up 122%. While the ARK Innovation ETF (ARKK) is the ninth best performing ETF of 2020 to this point, and it is up 116% year-to-date.
All three funds have expense ratios on the higher side at 0.79%, 0.75%, and 0.75%, but based on their performance, most investors would be happy to pay more than double that in fees.
All three funds have also been in existence since 2014 and have sizeable assets under management at $4 billion, $3.68 billion, and $12.55 billion, respectively. The funds also have roughly the same number of holdings, somewhere between 51 and 47.
Two of the three funds also invest in different areas. The ARK NEXT Generation Internet ETF invests in cloud and mobile companies benefiting from the infrastructure shift away from hardware and software. ARK Genomic Revolution ETF invests in companies that the fund managers believe will benefit from the genomics industry. And finally, the ARK Innovation ETF invests in companies poised to benefit from disruptive innovation in one of three areas: industrial innovation, genomics, or Web x.0, so it is a little mix of the other two ETFs.
And one more thing about the performance of the ARK ETFs. ARKW is the third-best performing ETF over the last three years, while ARKG is the sixth-best, and ARKK is the seventh-best performing ETF during the same timeframe.
When you look a little further back in history, the ARKW ETF is the fourth-best performing ETF, out of 1,676 possible ETFs, over the last five years. The ARKK is the seventh-best performing ETF, and the ARKG is the thirteenth best performing ETF over the past five years.
But, it’s just not what ARK says or does that makes them different. They also believe in transparency, and they go as far as to not only publicly show their investment holdings, but they show daily changes made to their holdings. And not just on their website, they will email you the moves they made each day, at the end of the trading day. You can sign up for their email list, and every day they send you their trades.
Performance, transparency, and a focus on finding disruptive investments are what have helped set ARK Invest apart from the pack in 2020.
Hopefully, that success can and will continue for years and decades to come.
Disclosure: This contributor did not own shares of any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.