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The latest to join the competitive world of ETFs is Ark Investment Management with its brand new products – Industrial Innovation ETF (ARKQ) and WEB X.0 ETF (ARKW).
Both funds are actively managed and as such do not track any particular index. Also, both ARKQ and ARKW look to provide long-term capital growth (read: New EuroStoxx 50 ETF Hits U.S. Markets).
ARKQ in Focus
The fund provides exposure to companies developing new products, services technologies and research in industries related to Robotics, Energy Storage, Innovative Materials, Alternative Energy Sources, Infrastructure development, Space Exploration, Autonomous Vehicles, 3D printing and Nanomaterials.
This approach results in the fund holding a basket of 45–55 securities charging 95 basis points as fees. Google occupies the top spot with 5.4% exposure, followed by Autodesk Inc. and Tesla Motors with 5.3% and 4.1% allocations respectively.
ARKW in Focus
ARKW focuses on companies that are expected to benefit from the shift of technology infrastructure from hardware and software to the cloud. These companies will primarily be either developers or users in the fields such as Cloud Computing, Wearable Technology, Big Data, Cryptocurrencies, Social Media, Services and Data Mining and Digital Education.
The fund holds a portfolio of 40–50 securities, with Athenahealth Inc, Apple Inc and Facebook Inc as the top three holdings. ARKW charges the same fees as ARKQ (read: Big Screen Apple iPhones See Record Sale: 3 Tech ETFs to Buy).
How Can it Fit in a Portfolio?
The actively managed fund is a good choice for investors seeking to invest in companies that are expected to transform economic sectors and the global economy.
"Technologically enabled innovation is changing the way we live and should be reflected in how we invest,” says Cathie Wood – the fund's portfolio manager.
While ARKQ focuses on companies that are revolutionizing the industrial world, ARKW will provide investors the opportunity to invest in companies that are transforming every sector of the economy and in turn transforming consumer and business behavior.
ETF Competition
The industrial equities space has quite a number of products targeting this space with SPDR Industrial Select Sector ETF (XLI) ruling with an asset base of $8.5 billion and an average trading volume of more than 9.5 million shares (read: Manufacturing Boom Will Benefit These 3 Industrial ETFs).
The fund is passively managed and provides exposure to companies from industries such as industrial conglomerates; aerospace & defense; machinery; air freight & logistics; road & rail; commercial services & supplies. XLI is also one of the cheapest choices in the space with just 18 basis points as fees.
Apart from this, the newly launched funds might face competition from products like Vanguard Industrials Index Fund (VIS), iShares U.S. Industrials ETF (IYJ) and First Trust Industrials AlphaDEX Fund (FXR), which are some of the other popular funds in the space managing assets worth more than $1 billion.
All these funds are passively managed with VIS being the cheapest charging 14 basis points as fees and FXR being one of the costliest in the space with 70 basis points as annual fees (see all industrial ETFs here).
Though the newly launched actively managed funds look quite appealing as far as their investment strategy is concerned, their success will be largely dependent on the net returns they manage to generate, given the fact that they are the most expensive choices in the space. If ARKQ and ARKW indeed manage to generate decent net returns, they might see great days ahead and be able to build a sizeable asset base as well.
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SPDR-INDU SELS (ETF:XLI): ETF Research Reports
VIPERS-INDUS (ETF:VIS): ETF Research Reports
FT-INDL/PROD (ETF:FXR): ETF Research Reports
ISHARS-US INDU (ETF:IYJ): ETF Research Reports
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Zacks Investment Research
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