ARKK: The Shotgun Approach Isn't Working

Group 1 - The ARK Innovation ETF (ARKK) was launched in 2014 and gained significant popularity around 2018, driven by the belief that disruptive innovation will drive returns [1][2] - ARKK's assets under management (AUM) increased dramatically in 2020 and 2021 but fell in 2022 due to rising interest rates affecting its core holdings [2][3] - Despite criticism for underperformance, investors from the fund's inception until now have generally fared well, with the fund only underperforming the S&P since 2022 [3] Group 2 - ARKK has an expense ratio of 0.75% per annum and is listed on the NYSE Arca electronic exchange [5] - The fund's investment themes include Next-Gen Internet, Fintech Innovation, Genomic Revolution, AI and Robotics, and Space Exploration [6][15][19][22][27] - ARKK's top holdings include companies like Tesla Motors (TSLA), Coinbase Global (COIN), and Roku, Inc. (ROKU) [10][36] Group 3 - The Next-Gen Internet theme focuses on companies benefiting from cloud technology and internet-based services [7] - The Fintech Innovation theme emphasizes companies that introduce technologically enabled financial products and services [15] - The Genomic Revolution theme targets companies involved in gene editing and biotechnology [19] Group 4 - ARKK's portfolio is diversified across various themes, with a typical range of 35-55 stocks and a median market cap of $8 billion [34] - The thematic composition of ARKK's portfolio includes Intelligent Devices (17.6%), Next Gen Cloud (13.3%), and Health Care (23.8%) [38] - The fund's average P/E ratio is approximately 58, significantly higher than the S&P average, indicating a focus on high-growth companies [50][52] Group 5 - The fund's strategy resembles a venture capital model, investing in high-growth, cash-poor companies with the hope of significant returns from a few successful investments [43][44] - ARKK's inability to access private equity limits its investment opportunities compared to traditional VC firms [48][49] - The fund's valuation ratios are expected to remain high due to its focus on disruptive innovation, which may deter value investors [52]