Investing in innovation is never a bad idea since, effectively, you're investing in the future. The challenge is in knowing which businesses will succeed along the way -- and which ones won't.
As with many other instances of investing in uncertain waters, exchange-traded funds (ETFs) can come to the rescue of investors. Two particularly attractive funds for investors to consider today are the ARK Genomic Revolution ETF (ARKG -3.51%) and the Global X Robotics & Artificial Intelligence ETF (BOTZ -1.49%). Both offer attractive growth prospects, and both are on sale.
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1. ARK Genomic Revolution
Companies in ARK Invest's Genomic Revolution ETF are ones that are working on extending and improving human life. And they do this by "incorporating technological and scientific developments and advancements in genomics into their business."
While the fund isn't exclusively for healthcare stocks, the vast majority of its holdings are in that sector. Of its top 10 holdings, six stocks contain either the word "therapeutics" or "pharmaceuticals" and all 10 are in the healthcare industry. Exact Sciences, which focuses on early cancer testing, is the fund's top holding. The company's innovations could help save lives, making it a feel-good business to invest in and a great option for long-term investors. It accounts for more than 9% of the ETF's total weight.
In second spot is telehealth company Teladoc Health, representing 7.7% of the total fund. Teladoc has been making it easier for patients to stay in contact with doctors through the use of virtual visits, which took off in popularity during the early stages of the pandemic. It's easier than ever for patients to do a check-up remotely and avoid an unnecessary trip to a doctor's office. And after Teladoc acquired chronic care company Livongo in 2020, the potential for its business has expanded. Making it easier for patients to stay on top of their chronic conditions can help save a lot of lives.
Typically, the Genomics Revolution ETF holds between 40 and 60 stocks. Its expense ratio is 0.75%, which isn't uncommon for these types of funds. Year to date, the ETF has fallen 26% (the S&P 500 is down 9%), but growth stocks as a whole haven't fared well in 2022 -- the more popular ARK Innovation ETF has declined by 31%. However, over the long term, the Genome Revolution ETF could generate significant returns for investors as it holds many up-and-coming healthcare companies.
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2. Global X Robotics & Artificial Intelligence
A fund that is less focused on healthcare but is still a solid growth option is the Global X Robotics & Artificial Intelligence ETF. BOTZ, as is its ticker symbol, is a diverse fund with 41% of the stocks it holds being in industrials, 40% in information technology, and more than 12% in healthcare.
The top holding in the ETF is chipmaker Nvidia, which accounts for 11% of the fund's total weight. Healthcare and robotics company Intuitive Surgical is also a key holding at a little more than 8%. Popular fintech stock Upstart Holdings, which is revolutionizing the lending industry by adding more analytics and automation into the loan process, is also among the fund's top 10 holdings.
At 38 holdings, this ETF is in the same ballpark as the Genome Revolution ETF although it is broader in the industries it touches. Its expense ratio of 0.68% is also comparable. Ultimately, the goal of the fund is to tap into promising growth opportunities in the global robotics market, which could top $74 billion by 2026 -- more than three times the $23 billion it was worth in 2020, according to estimates from Mordor Intelligence. The BOTZ ETF has fared a bit better than the ARK ETFs, but it too is in the red with a 20% decline thus far in 2022.
Whether you invest in one or both of these funds, investors will need to remain patient since many of these businesses are still in the early innings of their growth stories. Over the long haul, however, holding both of these ETFs could pay off for your portfolio in a big way.
