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A Soaring Actively Managed Fund

June 5, 2017 1:21 pm
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A Soaring Actively Managed Fund

Broadly speaking, actively managed funds have a tough time beating their benchmarks and passively managed rivals, including index funds and exchange traded funds.

Still, there will always some active managers that deliver the goods for investors and there will always some active funds that generate noteworthy returns. The ARK Web x.0 ETF (NYSE:ARKW) is a great example. In a year in which internet-related assets are standing out, ARKW stands tall. The two largest U.S. internet ETFs, both passively managed funds, are up an average of 25 percent year to date. ARKW, an actively managed ETF, is higher by 43 percent after hitting a record high last Friday.

The Case For ARKW

Alright, so ARKW has an advantage over the prosaic actively managed internet ETFs because its largest holding is an 8-percent allocation to the Bitcoin Investment Trust (NYSE:GBTC). That is a nice feather in ARKW's cap at a time when the cryptocurrency is soaring, but give the ARKW management team credit. This is an active fund, so an overt decision was made to allocate to the Bitcoin Investment Trust.

“Companies within ARKW are focused on and expected to benefit from shifting the bases of technology infrastructure to the cloud, enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media,” according to New York-based ARK.

ARKW was one of the first two ETFs introduced in September 2014 by ARK Investment Management, a New York-based asset manager with a reputation for unearthing story growth stocks prior to astronomical rises taking place. The firm now offers four actively managed ETFs and two passive, index ETFs.

Down To The Details

ARKW usually holds 30–50 U.S.-listed stocks that can hail from a variety of internet-related and new economy sectors. Currently, roughly two-thirds of the ETF's roster is allocated to cloud computing or cybersecurity, big data and e-commerce equities.

In addition to the Bitcoin Investment Trust, ARKW's top 10 holdings read like a who's who of 2017's soaring internet and technology stocks. That group includes Amazon.com, Inc. (NASDAQ:AMZN), Elon Musk's Tesla Inc. (NASDAQ:TSLA), Nvidia Corporation (NASDAQ:NVDA) and Facebook Inc. (NASDAQ:FB).

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