ARKQ: Two Sides Of The Aggressive AI Economy Play (BATS:ARKQ)

Core Insights - The ARK Autonomous Technology & Robotics ETF (ARKQ) focuses on companies benefiting from advancements in technology related to energy, automation, and transportation, and has shown strong performance since its inception in 2014, particularly during the pandemic [5][10][55] - Despite its historical outperformance, ARKQ is characterized by high volatility and significant risks, exemplified by a 46.75% decline in 2022 [3][18][55] - The ETF is actively managed by Cathie Wood, who is known for her focus on disruptive innovation and has attracted considerable media attention [8][13] Fund Overview - ARKQ was launched on September 30, 2014, and was initially known as the ARK Industrial Innovation ETF before being rebranded in November 2019 [10] - As of September 10, 2025, ARKQ has $1.3 billion in assets under management, significantly larger than the median for its subclass [10] - The ETF has a high expense ratio of 0.75%, which is 1.75 times higher than the median for Technology ETFs [10] Portfolio Composition - The portfolio includes a mix of micro-, small-, medium-, and large-cap companies, with large caps making up 89.04% of the portfolio as of September 10, 2025 [6][7] - The top ten holdings account for nearly 60% of net assets, with Tesla being the largest at 11.35% [33] - The sector allocation is heavily weighted towards Industrials (40.9%) and Information Technology (32.6%), while sectors like Consumer Staples and Financials are entirely excluded [37] Performance Analysis - ARKQ has outperformed the iShares Core S&P 500 ETF (IVV) since inception, but has underperformed the Invesco QQQ Trust ETF (QQQ) in six out of ten calendar years [21][25] - The ETF's annualized return from October 2014 to August 2025 is 16.51%, compared to QQQ's 18.34% [27] - The maximum drawdown for ARKQ was -52.62%, indicating a higher risk profile compared to QQQ, which had a maximum drawdown of -32.58% [27] Risk and Volatility - ARKQ is classified as a high-risk investment, with a weighted average beta of 1.6, suggesting it is more volatile than the overall market [40][46] - The ETF's downside capture ratio exceeds 135%, indicating that it tends to experience larger losses than the S&P 500 during market corrections [27][49] - The fund's focus on high-beta stocks with generous valuations contributes to its risk profile, particularly in a rising interest rate environment [44][55] Investment Suitability - ARKQ is targeted at aggressive growth investors willing to accept high volatility for the potential of substantial long-term gains [28] - It is recommended to be used as a satellite holding within a diversified portfolio, rather than a core investment [30] - Investors should be prepared for the possibility of significant losses, as evidenced by the ETF's performance during market downturns [55][57]