Investing

A Look at ARK Invest’s Q3 for ARKQ

Markets have been especially volatile recently, depending on what you’re picking. The rotation trade has been ferocious to some tech stocks, ARK Invest has seen that firsthand. September knocked off a series of gains for the broad markets but tech has been selective to show for it. Even with this recent downturn, ARK Invest funds seem poised to benefit going forward.

ARK Invest funds have been selectively tech heavy, which explains recent movement relative to interest rates. Taking into account recent moves by the Federal Reserve, these funds are headed for boom or bust. Year-over-year comparisons on a few of these funds suggest weakness. Right now the question is where ARK Invest is going and if they can back it up.

Here we’re looking at ARK Autonomous Technology and Robotics ETF (NASDAQ: ARKQ). As it stands now, this fund underperformed the broad-based market indexes during the third quarter. Some of its top detractors were Kratos Defense & Security Solutions Inc. (NASDAQ: KTOS) and Baidu Inc. (NASDAQ: BIDU).

According to the report:

ARK believes that Kratos is well-positioned to be a leader in the burgeioning market for military drones. Shares of Baidu sold off after the Chinese government cracked down on technology-focused companies with access to sensitive data.

ARK continued about its other holdings that were more impressive:

Among the top contributors were Tesla (TSLA) and Unity Software (U). Tesla appreciated after beating both top and bottom-line expectations during the second-quarter based on particularly strong momentum in electric car sales in China. Additionally, during its inaugural artificial intelligence (AI) Day, Tesla showcased its best-in-class training computer and groundbreaking progress in autonomous driving. Unity Software contributed to performance following a second-quarter report that exceeded revenue and profit expectations and guidance. Unity also acquired OTO, an AI-focused platform that could create safer gaming environments involving both voice and text chat.

For reference, here is the portfolio composition for this fund:

Element Exposure
Autonomous Vehicles 37.9%
Robotics 20.4%
Energy Storage 13.7%
3D Printing 13.7%
Space Exploration 9.5%
Development of Infrastructure 4.7%
Innovative Materials 0.1%
Alternative Energy Sources 0.1%

Also, here are the top 10 holdings:

Company Weight
TESLA 11.8%
KRATOS DEFENSE & SECURITY 7.2%
TRIMBLE 7.1%
UIPATH – CLASS A 6.6%
UNITY SOFTWARE 6.0%
IRIDIUM COMMUNICATIONS 4.7%
KOMATSU 3.7%
LOCKHEED MARTIN 3.7%
JD.COM 3.7%
3D SYSTEMS 3.5%
Total 58.0%

The exchange-traded fund recently closed at $82.59, in a 52-week range of $57.16 to $101.11. Over the past quarter, net asset value for the ETF dropped 9.5%, and the market price tracked practically the same. Year to date, the ETF is up 2.3%, and over the past year it is up about 37.1%.


Note that Catherine Wood, the CEO and CIO of ARK Investment Management, is a minority and nonvoting shareholder of 24/7 Wall St., owner of 247wallst.com.