Market Overview

This ARK ETF Is Flipping Its Script

This ARK ETF Is Flipping Its Script

The ARK Industrial Innovation ETF (NYSE: ARKQ) is undergoing some big changes. In fact, ARKQ will no longer go by the aforementioned name.

What Happened

In a recent filing with the Securities and Exchange Commission, New York-based ARK Investment Management, ARKQ's issuer, said it's changing the exchange traded fund's name to the “ARK Autonomous Technology & Robotics ETF.”

More important than the name change is a shift in ARK's investment objective to better reflect positioning in the fast-growing autonomous vehicle and robotics themes.

ARKQ is one of several ARK ETFs known in part for having large weights to Tesla Inc. (NASDAQ: TSLA). That stock accounts for 11.12% of the fund's weight, according to issuer data.

Why It's Important

The $172 million ARKQ, which turns 5 years old at the end of this month, is up 55.9% over the past three years, beating the S&P 500 by 1,120 basis points over that span. Currently, the fund features autonomous technology and robotics exposure, but those themes are mixed in with 3D printing, energy storage and space exploration.

On Sept. 5, “the Fund’s principal investment policy will change such that the Fund will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of autonomous technology and robotics companies that are relevant to the Fund’s investment theme of disruptive innovation,” according to ARK's filing.

ARKQ can hold 30 to 50 stocks and presently holds 36. The SEC filing did not mention which securities in the fund would be sold, if any, as a result of the changed investment objective.

What's Next

In the filing, ARK defines automation transformation, energy transformation and artificial intelligence.

For example, ARK “considers a company to be an artificial intelligence (“AI”) company if it: (i) designs, creates, integrates, or delivers robotics, autonomous technology and/or AI in the form of products, software or systems; (ii) develops the building block components for robotics, autonomous technology or AI, such as advanced machinery, semiconductors and databases used for machine learning; (iii) provides its own value-added services on top of such building block components, but are not core to the company’s product or service offering; and/or (iv) develops computer systems that are able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making and translation between languages,” according to the filing.

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