- (1:00) - Breaking Down ARK Invest's Performance In 2021
- (12:30) - Gaining Exposure To High Flying Tech Stocks
- (16:00) - Will Inflows Impact How Cathie Woods Will Invest Going Forward?
- (22:20) - Learning From The Fidelity Magellan Mutual Fund
- (30:50) - Episode Roundup: ARKK, ARKG, CTRU, QQQ, QQQM, XBI, FMAG
- Podcast@Zacks.com
Welcome to Episode #297 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey talks with Zacks Director of ETF Research, Neena Mishra, who is also the Editor of Zacks ETF Investor portfolio, and is the host of the ETF Spotlight podcast, about Cathie Wood’s ARK Invest ETFs.
ARK Innovation and ARK Genomic Revolution ETFs have been some of the hottest ETFs the last few years. But both ARK Innovation and ARK Genomic Revolution finished in the red in 2021.
Where do they go from here in 2022?
Should investors be taking a look at the ARK Invest ETFs or should they just stick with the indexes like the Nasdaq 100 (QQQM) and the SPDR S&P BioTech ETF (XBI)?
The ARK Invest ETFs and Cathie Wood
1. ARK Innovation ETF ARKK
In 2020, the ARK Innovation ETF, Cathie Wood’s flagship ETF, was the hottest ETF in the United States. Big bets on “pandemic winners” like Zoom Video and Teladoc (NYSE:TDOC) drove the ETF to a 150% gain.
But despite having a 10% position in Tesla (NASDAQ:TSLA), which gained nearly 50% on the year, ARK Innovation finished 2021 down about 24%.
Since inception on Oct 31, 2014, the ARK Innovation ETF has returned 374%, easily beating the S&P 500 over that period, which was up 138%.
Will ARK Innovation return to form in 2022?
2. ARK Genomic Revolution ARKG
ARK Genomic Revolution is just as old as ARK Innovation, with inception on Oct 31, 2014. It, too, had a fantastic 2000 with gains over 200%.
But ARKK also came back down to earth in 2021, falling over 30%. Still, since inception, ARKG is up over 200% versus the S&P 500 up about 138%.
ARKG also owns Teladoc, same as ARKK, in its top 5 positions, which was down 54% in 2021. Other prominent holdings, such as Exact Sciences (NASDAQ:EXAS), were also down double digits on the year.
Will its healthcare innovator companies make a rebound in 2022?
3. ARK Transparency ETF CTRU
ARK Invest is not resting on its laurels as it continues to launch new ETFs, including ARK Transparency ETF, which launched in Dec 2021.
But it’s not using Cathie Wood’s expertise, instead CTRU is designed to track the Transparency Index, which is a list of the 100 most transparent companies.
So far, few investors have been interested in CTRU as it has taken in little money since launching.
Are investors only interested in active ARK investing or will CTRU ultimately become an investor favorite?
4. Invesco Nasdaq 100 ETF QQQM
If you’re trying to keep your fees down, Neena pointed out that the QQQM, the NASDAQ 100 “mini”, mostly tracked the ARKK ETF until 2020.
QQQM has an expense ratio of just 0.15% whereas ARKK’s expense ratio is 0.75%.
She recommends that traders use QQQ while long-term investors use QQQM, as it has a lower expense ratio.
While ARKK outperformed in 2020, it was the reverse in 2021 as QQQM has gained 10.7% over the last 6 months but ARKK has fallen 24.3%.
Should investors just stick with the QQQM index?
5. SPDR S&P Biotech ETF XBI
Similarly, the SPDR S&P Biotech ETF has tracked with ARKG over the years as well.
ARKG outperformed in 2020, but XBI has taken back the crown over the last 6 months, falling just 15.5% while ARKG was down 34.5% during that time.
XBI has an expense ratio of just 0.35% versus ARKG’s of 0.75%.
For buy and hold long-term investors, the expense ratio could really add up.
XBI is equal weight, so you don’t get higher concentration among a few names, as you do in ARKG but ARKG investors are betting on Cathie’s expertise and research.
Will ARKG get its mojo back in 2022?
What Else Should You Know About the ARK Invest ETFs and 2022?
Tune into this week’s podcast to find out.
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SPDR S&P Biotech ETF (XBI): ETF Research Reports
ARK Innovation ETF (ARKK): ETF Research Reports
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports
ARK Transparency ETF (CTRU): ETF Research Reports
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Zacks Investment Research