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Is Cathie Wood's ARKK ETF a Buy Now?

By Eric Cuka – Aug 6, 2021 at 10:00AM

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ARK Invest's ARKK ETF has been under scrutiny in recent months due to its underperformance, but is it headed higher from here?

ARK Invest ETFs have been the center of media attention and drama so far in 2021. ARK Invest, founded by Cathie Wood in 2014, has been under the microscope after having a standout year following the pandemic. Today I am focusing specifically on one ARK Invest ETF, the ARK Innovation ETF (ARKK -3.27%). Over the past year, ARKK has returned investors a whopping 48.75% versus Invesco QQQ ETF's (QQQ -1.45%) spectacular 36.63%. Even after a rough start to 2021, ARKK has outperformed QQQ by over 12%. The question investors have is whether this was solely fueled by the pandemic. If you zoom out and look at three-year returns, ARKK is up over 177% versus 108% for QQQ. That's 69% outperformance in three years. 

ARKK is an actively managed ETF with an expense ratio of .75%. ARK Invest makes daily buys and sells and shares this information publicly. Although the transparency is great, I believe many investors use this data incorrectly. I see people post on social media and websites worried about what ARK Invest bought or sold the day before. The goal of ARKK is to invest in "disruptive innovation" over the long term. Cathie Wood has been very vocal in explaining that the fund invests with the goal of multiyear holdings, capturing gains from secular growth trends and disruptive technology. 

ARKK invests in the following themes:

  • Genomic revolution
  • Industrial innovation
  • Next-generation internet
  • Fintech innovation

In today's video I break down ARKK. I provide a list of its current holdings, opinions on why the ETF has underperformed YTD, my thoughts on its long-term growth prospects, and technical analysis on where the price could be headed. 

*Stock prices used in the below video were during the trading day of August 5, 2021. The video was published on August 5, 2021.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Eric Cuka owns shares of ARK Innovation ETF, Amazon, Deere & Company, DocuSign, DraftKings Inc., Invesco QQQ Trust, Lockheed Martin, PagerDuty, Palantir Technologies Inc., Sea Limited, Square, Teladoc Health, Tesla, Twilio, Twist Bioscience Corporation, UiPath Inc., Unity Software Inc., Vanguard S&P 500 ETF, Zillow Group (A shares), and Zoom Video Communications and has the following options: long August 2021 $40 calls on Palantir Technologies Inc. The Motley Fool owns shares of and recommends Amazon, DocuSign, PagerDuty, Palantir Technologies Inc., Roku, Sea Limited, Shopify, Skillz Inc., Spotify Technology, Square, Teladoc Health, Tesla, Twilio, Unity Software Inc., Vanguard S&P 500 ETF, Zillow Group (A shares), Zillow Group (C shares), and Zoom Video Communications. The Motley Fool recommends Lockheed Martin and recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $1,140 calls on Shopify, short January 2022 $1,940 calls on Amazon, and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy. Eric is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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