Author Topic: ARK disruptive innovation ETFs - is anyone investing with them?  (Read 1446 times)

kiwiozearlyretirement

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A friend is interested in ARK disruptive innovation ETFs.
The https://ark-funds.com founded by Catherine D Wood

So this company tries to predict what will be the technologies of the future. Their predictions seem credible and they have ETFs investing in innovative sectors of this market; genome technology, 3d printing, autonomous vehicles, cryptoassets etc.

They actively pick the likely success stories for their ETF. They even have index versions tracking all Israeli innovation companies and all 47 3d printing companies. Seems weird to have an index for such a narrow field. I always thought an index helps you diversify. I don't get it.

Their management fee is 0.75% for the actively managed fund. Which is high. But if a fund had put together google, amazon, apple etc 10 years ago this would have been a great performer despite the high fees.

Has anyone else heard of this group or looked at it?


Boll weevil

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Re: ARK disruptive innovation ETFs - is anyone investing with them?
« Reply #1 on: May 21, 2018, 08:31:50 AM »
https://forum.mrmoneymustache.com/investor-alley/any-arkkarkw-etf-holders/

Don't worry about not look for or finding it... the search feature of the forums is slow. I just don't want to type out the whole thing again.

CorpRaider

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Re: ARK disruptive innovation ETFs - is anyone investing with them?
« Reply #2 on: May 21, 2018, 12:19:39 PM »
PASS.  VTI gives you plenty (probably too much) weighting to bubble basket/go-go stocks as is.

MustacheAndaHalf

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Re: ARK disruptive innovation ETFs - is anyone investing with them?
« Reply #3 on: May 22, 2018, 09:59:37 AM »
I thought the two ETFs ARKW and ARKK were interesting from a momentum perspective, since they are atop the 3 year and 1 year performance charts.

But there's a couple of qualifications there.  Using momentum to pick ETFs doesn't seem to beat the S&P 500 in the short 2.3 years I've been trying it.  And the academic definition doesn't cover arbitrary groups of individual stocks (like ETFs) being held long only (studies typically also look at shorting stocks).  So don't read too much into momentum there.

Plus, my other qualification matches the earlier poster's comment: start with a core portfolio of passive index funds, then maybe a fraction can be used to try and outguess the entire market.

neil

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Re: ARK disruptive innovation ETFs - is anyone investing with them?
« Reply #4 on: May 22, 2018, 02:12:08 PM »
Investing in 3D printing isn't the same idea as FAANG ten years ago (minus FB, I suppose) given that the mega tech corps were mega back then.  It was only a question whether they would continue to reinvest well, and they all have.  It is probably closer to investing in Amazon in 1998 (at the time, barely more than a online book retailer) or even AAPL in the early 2000s (whose entry in MP3 players looked little more than a desperate attempt to stay relevant).  An index fund of, say, 90s era e-retailers may not have even panned out with AMZN in the index simply from the sheer amount of total failures.  In reality, such an index fund would probably have closed in 2001-2002 due to lack of funds, because losses would scare everyone away.

Timing is a secondary problem.  Making manufacturing more modular and generic would invite a boom and the inventors will do well, but profitability in such methods is hard to crack.  Even if it's a matter of if rather than when, when could be 20 years from now.  A secondary problem is the fact that a lot of these companies are now not public and held privately through venture cap funds, which have exploded in the last few years.  An index fund of social media companies would not benefit from FB's meteoric rise because it stayed private for so long (unless said "index" fund had access to a financing round, could legally participate, and was willing to take a risk on an illiquid position.)

You also can't plug this kind of investment strategy into a FIRE calculator and estimate a potential retirement off it.  Ultimately, if your core isn't in VTSAX or similar, you're taking on immeasurable risk in retirement (in the sense that you can't measure the probabilities) and the conclusion usually ends up that you do this with very small percentages of your portfolio.  So, if you take 5% of your portfolio and put it in stuff like this, does it really matter too much?

I'm sure ARK products are fine for what they are (and 0.75% isn't extreme for this kind of fund), but in the end they are simply offering a service that has a customer base and performance is somewhat secondary.  They will close the products if interest wanes and open new ones.  Survivorship bias is a real problem.  In bear markets, money flows toward stability and riskier and illiquid issues get hammered.  If AUM hit a certain threshold, the funds close and no one hears about them again.

YttriumNitrate

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Re: ARK disruptive innovation ETFs - is anyone investing with them?
« Reply #5 on: May 22, 2018, 05:02:31 PM »
As a general rule, the more lazy business jargon there is in a description of an item, product, or service, the less likely I am to buy that item product or service. I'm still looking for the NextGen Leveraged Dynamic Disruptive Synergy Core Competency Coin Fund so I can short the hell out of it.

kiwiozearlyretirement

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Re: ARK disruptive innovation ETFs - is anyone investing with them?
« Reply #6 on: May 27, 2018, 08:55:46 AM »
Thanks everybody for your comments.
It is basically gambling and if I do invest with these guys I will use a small amount of my portfolio