Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

In Search Of Margin Expansion And Profitability? 2 ETFs For Growth Investors

By Investing.com (Tezcan Gecgil/Investing.com )ETFsJul 19, 2021 05:15AM ET
www.investing.com/analysis/in-search-of-margin-expansion-and-profitability-2-etfs-for-growth-investors-200592176
In Search Of Margin Expansion And Profitability? 2 ETFs For Growth Investors
By Investing.com (Tezcan Gecgil/Investing.com )   |  Jul 19, 2021 05:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The easing of monetary policy, especially since the start of the pandemic, has provided tailwinds for broader markets. Both the S&P 500 and NASDAQ 100 hit record highs earlier in July. As a result, there is growing concern that broader indices, as well as a large number of shares, have deviated from historical valuations.

Meanwhile, Fed Chair Powell recently said that despite worries over increasing inflationary pressures, the central bank is unlikely to change policy soon. Thus, analysts wonder whether investors' risk appetite could continue and valuations, especially for growth stocks, could rise in the second half of the year, too.

Growth stocks typically offer attractive opportunities for robust long-term returns, regardless of short-term choppiness in share prices. Investors are usually ready to pay a premium for continuous revenue growth, margin expansion and potential profitability.

Therefore, today we'll introduce two exchange-traded funds (ETFs) that might appeal to readers who expect more impressive performance from such growth businesses with disruptive business models.

1. ARK Next Generation Internet ETF

  • Current Price: $140.31
  • 52-Week Range: $91.76 - $191.13
  • Expense Ratio: 0.79% per year

The ARK Next Generation Internet ETF (NYSE:ARKW) is an actively-managed fund run by Cathie Wood's ARK Invest. We've written previously about a number of ARK funds (for example, here, here, and here).

ARKW provides exposure to innovative firms that focus on the Internet of Things (IoT), artificial intelligence (AI), big data analytics, social platforms, e-commerce as well as blockchain and cryptocurrencies. Mordor Intelligence suggests:

” IoT is enabling businesses across the globe to collect a tremendous amount of data from multiple sources. The role of Artificial Intelligence in IoT is to automatically identify patterns and also detect anomalies. The global Artificial Intelligence (AI) in the IoT market is expected to grow at a CAGR of 27.3% during the forecast period (2021-2026)."

ARKW Weekly
ARKW Weekly

The ETF, which typically invests in 35-50 companies, began trading in September 2014. The leading 10 stocks comprise more than 48% of net assets of $6.35 billion.

Tesla (NASDAQ:TSLA) has the highest slice with 10.48%. Therefore, large moves in TSLA stock are likely to have an impact on the fund. Next in line are Twitter (NYSE:TWTR), Shopify (NYSE:SHOP), Square (NYSE:SQ), and Teladoc (NYSE:TDOC).

Cryptocurrency enthusiasts would be interested to know that ARKW also invests in the Bitcoin Investment Trust (OTC:GBTC) and the crypto exchange platform Coinbase Global (NASDAQ:COIN). According to metrics from MarketsandMarkets Research:

“The cryptocurrency market size is expected to grow from USD 1.6 billion in 2021 to USD 2.2 billion by 2026, at a CAGR of 7.1%. Transparency or distributed ledger technology and growth in venture capital investments are the key factors driving the growth of the cryptocurrency market.”

Put another way, those investors who would like access to the potential growth in digital assets, especially Bitcoin, should do further due diligence on the fund.

Since the start of 2021, ARKW is down about 4%. However, over the past 12 months, it is up 50% and hit a record high in mid-February. Interested readers could regard the decline over the past several months as an opportunity to buy into the names in the fund.

2. VanEck Vectors Video Gaming and eSports ETF

  • Current Price: $68.24
  • 52-Week Range: $52.71 - $81.39
  • Dividend Yield: 0.12%
  • Expense Ratio: 0.55% per year

The VanEck Vectors Video Gaming and eSports (NYSE:ESPO) gives access to firms that are part of the video game development, mobile gaming, e-sports and related hardware and software space. Since its inception in October 2018, assets have reached $773 million.

ESPO Weekly
ESPO Weekly

ESPO focuses on a high-growth theme. Recent research highlights, in 2021 "the global esports economy will generate revenues of $1.1 billion, a year-on-year growth of +15.7%. Most of these revenues (74.8%) will come from sponsorships and media rights, which will total $822.4 million, a +17.2% increase from last year. Consumer spending on tickets and merchandise will total $121.7 million.”

The ETF, which tracks the MVIS Global Video Gaming and eSports Index, has 26 holdings. More than 43% of the firms come from the US, followed by China (19.46%), Japan (18.00%), Taiwan (8.33%), South Korea (4.60%) and others. Communication services (70.3%), information technology (25.4%) and consumer discretionary (4.2%) are the three sectors in the ETF.

Close to 62% of the fund is in the top 10 stocks. Among the leading names in the roster are the chip heavyweights giants NVIDIA (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD); Chinese tech and entertainment stock Tencent (OTC:TCEHY); Singapore-headquartered Sea (NYSE:SE), whose platforms cover digital entertainment, e-commerce and financial services and gaming business Activision Blizzard (NASDAQ:ATVI), which develops and distributes interactive entertainment products and software.

Since the start of the year, the fund is down about 2.5%. However, over the past 52 weeks, ESPO returned close to 29% and, like ARKW, hit an all-time high in mid-February. Potential buy-and-hold investors could find value around these levels.

In Search Of Margin Expansion And Profitability? 2 ETFs For Growth Investors
 

Related Articles

BlackBull Markets
Yellow Card For Sports ETF By BlackBull Markets - Sep 01, 2021

Cristiano Ronaldo announced that he would be leaving Juventus Football Club (MI:JUVE) and returning to play for the club where he started his professional career, Manchester United...

Damian Rodgers
A Gold ETF That Pays You Monthly By Damian Rodgers - Jul 29, 2021

There is a problem with gold ETFs like GLD (NYSE:GLD), iShares Gold Trust (NYSE:IAU), and GraniteShares Gold Trust (NYSE:BAR). They don’t pay any yield at all to investors. Gold...

In Search Of Margin Expansion And Profitability? 2 ETFs For Growth Investors

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Zero Belt
Zero Belt Jul 19, 2021 1:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
interested
Wawan Irawan
Wawan Irawan Jul 19, 2021 1:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Zero Belt
Zero Belt Jul 19, 2021 1:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
kull
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email