ARK ETFs have been gaining huge interest globally, especially since 2020 and going into 2021. This is partly driven by the COVID-19 pandemic, which cast a spotlight on disruptive technology trends spearheading growth in the #NewNormal world we now live in.
Of course, another reason for its popularity among investors has been its monster returns in 2020 – with its flagship ARK Innovation Fund delivering over 152% in 2020.
ARK describes their investment philosophy as:
“While traditional investors seek safety in benchmarks and passive strategies, ARK believes this behaviour 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.”
According to a NASDAQ report in February 2021, ARK have seen a spike in money pouring into its ARK ETFs over the past year. ETFs managed by ARK have grown to over US$50 billion in assets under management (AUM), from about US$3.6 billion a year ago.
Along with the rise in prominence of ARK ETFs, its founder, CEO and CIO Catherine Wood has also gained widespread recognition globally, if not a cult figure among investors.
Which Is The Best ARK ETF To Invest In?
There are actually 7 ARK ETFs that we can invest in. While most ETFs are passively managed, replicating an index, there is a fraction of actively managed ETFs as well.
5 of ARK’s 7 ETFs are actively managed ETFs (first 5 in list), while the other 2 ETFs track indexes that are heavily geared towards innovation (last 2 list).
Read Also: Complete Guide To ETF Investing In Singapore
The 7 ARK ETFs are:
- ARK Innovation ETF (ARKK)
- ARK Autonomous Technology & Robotics ETF (ARKQ)
- ARK Next Generation Internet ETF (ARKW)
- ARK Genomic Revolution ETF (ARKG)
- ARK Fintech Innovation ETF (ARKF)
- The 3D Printing ETF (PRNT)
- Israel Innovative Technology Fund (IZRL)
The ARK Innovation ETF (ARKK) is its flagship fund, with US$17.7 billion in assets under management (as of 31 December 2020). This number is likely to have moved up in the first 3 months of 2021.
According to its factsheet, companies within ARKK “rely on or benefit from” advancements in these 4 business sectors:
- Genomic Revolution
- Industrial Innovation
iii. Next Generation Internet
In essence, there is no “best” ARK ETF as its flagship ETF comprises parts of its other 4 actively managed ETFs. This gives us the option to invest in either the flagship fund, or within the sub-sectors if we have greater conviction in them.
Another thing to note when investing in ARK ETFs, or any other ETFs, is the expense ratio. According to the ARKK factsheet, its expense ratio is 0.75%. This is relatively high compared to other ETFs, but we have to understand that it is an actively managed ETF. This means that there will be higher costs associated with having fund managers actively researching and managing the investments.
In comparison, passive ETFs in Singapore, such as the SPDR S&P 500 ETF (SGX: S27) charges an expense ratio of 0.0945%, the NikkoAM STI ETF (SGX: G3B) charges 0.30%, and the Lion-Global S-REIT ETF (SGX: CLR) charges 0.60%.
What Companies Are Within ARK Innovation Fund (ARKK)?
The flagship ARKK was incepted in 2014 and typically invests in 35 to 55 companies at any point – it is invested in 56 companies as of 26 March 2021. As mentioned, these companies will be within the four sectors – Genomic Revolution, Industrial Innovation, Next Generation Internet and Fintech.
ARKK ETF has an 82% exposure to investments in North America, just over 8% to Emerging Asia and 5% to developed Europe.
It’s biggest holdings (as of 3 March 2021) are in:
|No.||Company||Ticker||Weightage (in ARKK)|
|2||SQUARE INC – A||SQ||6.17%|
|5||ZILLOW GROUP INC – C||Z||3.65|
|6||ZOOM VIDEO COMMUNICATION – A||ZM||3.31|
|7||SPOTIFY TECHNOLOGY SA||SPOT||3.14|
|9||BAIDU INC – SPON ADR||BIDU||2.88|
|10||CRISPR THERAPEUTICS AG||CRSP||2.88|
|11||EXACT SCIENCES CORP||EXAS||2.76|
|13||TWILIO INC – A||TWLO||2.40|
|14||UNITY SOFTWARE INC||U||2.29|
As you can see, many of the top companies are instantly recognisable to those who are already exposed to investing. Even for new investors, Tesla, Zoom, Spotify, Baidu and Docusign are very recognisable. For the full list of the 56 companies, you can refer to the ARK website.
How Has ARKK ETF Performed?
ARKK has delivered phenomenal returns in the past few years. This has definitely contributed to its rise in popularity among new and existing investors. Being exposed to the most exciting business sectors and companies has also captured the imagination of many.
Since its inception in 2014, ARKK has delivered an annualised return of over 36%. This means a $10,000 investment in2014 would have grown into close to $63,300 today. This is about 3 times better than the S&P 500 and 6.5 times better than the Straits Times Index (STI).
Source: ARK Investment Management
In 2020, ARKK delivered a return of over 152%. In 2021, the market has seen a downward correction in technology stocks since mid-February, which has seen ARKK down 9% in 2021 as of 26 March 2021.
How Singapore Investors Can Invest In The ARKK ETF?
ARKK is listed on the New York Stock Exchange (NYSE) in the US. This means that we can simply invest in it similar to how we invest in other companies listed on the NYSE – through a stock brokerage firm that gives us access to that market.
Most local stock brokerage accounts allow us to invest in the US markets. We can compare the stock brokerage charges to see which gives us the best rate to invest in US-based stocks. Stock brokerages such as FSMOne, moomoo, Tiger Brokers, Interactive Brokers, Saxo Capital Markets and others can offer competitive rates and convenience when investing in US-based stocks.
For Singapore investors, another way to gain (relatively similar) exposure to the ARKK ETF is via the NikkoAM ARK Disruptive Innovation Fund. According to the fund factsheet, it looks like a replica of the ARKK ETF, but may not exactly track its performance. We can buy this fund on platforms such as FSMOne, iFAST Central, dollarDEX, Navigator and POEMS.
However, when investing in this fund, we have to note that there is a 1.5% fund management fee – not even including any sales charges – and this is twice as costly as the ARKK ETF.
We can also invest in the ARKK ETF (and the other ARK ETFs) via robo-advisory platform Kristal.AI. However, on top of the expense ratio charged by the ETF, we will also have to fork out an additional management fee of 0.3% charged by Kristal.AI. The first $10,000 of investments on Kristal.AI does not attract this charge though.
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