This theme presents the top 20 unweighted constituents of ARK Innovation
Watching on with disbelief, financial advisors and institutional investors alike had to contend with the rising share price of ARKK which, over the span of 3 years, increased from 70$ (November '19) to 1 200$ (November '21)
Unwarranted and impossible to explain on basis of valuation models, profitable ARKK investments were powered by the success of Tesla
The fund's rockstar status, carefully nurtured by founder Catherine Wood's media presence, has had to contend with hard questions about the firm's organisation and expertise, in the wake of its faltering 2022 performance
Mrs Wood has been steadfast that technological revolutions are upending the outlook of manufacturing and service companies because innovation opens new venues by combining distinct strands of research, mixing expertise across different fields and delivering new services in deeply transformative ways to consumers
The fund's recent performance, although volatile, has supported her analysis with a focus on firms harnessing (expected) technological breakthrough R&D and disruption
The concept is sound and seems to owe much to the transformation of Tesla, an ARK investment of $600 million as of June'25 (down from $1.7 billion in March '22) and representing 10% of the fund, from a car company manufacturing electrical vehicles to a platform delivering (or expecting to deliver) a range of services (by way of software upgrades benefitting the driver to robotaxis)
Over time, deep and sometimes abysmal share price losses expose all platforms, except for the 'mega-few'...
- the grip of Internet giants on some of the most successful platforms is tight - Amazon
, Google or Facebook/Meta Platforms leave little to no space to start-ups of the kind favored by Mrs. Wood - their inclusion in ARKK's line-up is no coincidence - barriers to entry, once the success of a start-up platform emerges, are not high because the mix and match cross-sectional technologies are available to any deep-pocketed competitor
- caught between a long stretch of unprofitable years to establish a market presence and lagged entry of legacy firms determined to defend their turf, many start-ups may never reach profitability
These constraints weigh on ARK Invest's selection and the top 20 companies of ARKK presented in our selection, representing approx. 80% of the fund, attest of its narrow focus (technology and healthcare)
Three investment strategies favored by ARK stand out
- gene - editing - CRISPR
, Beam and Intellia Therapeutics - digital platforms - with Shopify Invalid tag asset and UiPath
- blockchain plantforms - with Circle Internet
and Coinbase
By prioritizing these applications in the fund, ARKK signals their medium-term growth potential - worth consideration for patient investors today
Bookmarking companies and control for their performance over short time frames, shifts in market anticipations will be highlighted
Check performance and volatility from 1 week to 1 month - on tab at top right of your screen