Cathie Wood is the head of Ark Investment Management, which operates 13 exchange-traded funds (ETFs) designed to give investors exposure to innovative new industries like artificial intelligence (AI), electric vehicles, robotics, and even space exploration.
An ETF is an investment vehicle capable of holding dozens or even hundreds of stocks. It's constructed by an experienced manager (in this case, Wood and Ark), and it's packaged into one single security for investors to buy.
ETFs are a great alternative to building a portfolio of individual stocks yourself because it eliminates the risks that come with picking winners and losers.
AI has been a huge focus for Wood this year, and two of Ark's ETFs can help you invest in this new technology right alongside her. Here's what they are.
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1. Ark Autonomous Technology & Robotics ETF (ARKQ)
The Ark Autonomous Technology & Robotics ETF (ARKQ +3.36%) is an active fund, which means Wood and her team regularly buy and sell stocks with the intention of maximizing returns for investors. ARKQ invests in both domestic and international stocks, specifically those that will benefit from the development of autonomous technologies, AI, and robotics.
ARKQ holds 35 stocks, but it's heavily weighted toward its top five positions, which account for 46.3% of the total value of the portfolio:
|
Stock |
ARKQ Weighting |
|---|---|
|
1. Tesla (TSLA +3.93%) |
12.53% |
|
2. UiPath (PATH 1.28%) |
11.19% |
|
3. Kratos Defense & Security Solutions |
9.31% |
|
4. Iridium Communications |
6.72% |
|
5. Trimble Navigation |
6.55% |
Data source: Ark Investment Management. Portfolio weightings accurate as of Dec. 12, 2023, and are subject to change.
It's no surprise that Tesla is the largest holding in ARKQ, because Wood has repeatedly said it's the biggest AI play in the world. Tesla isn't just an electric vehicle manufacturer; it's also a leading developer of fully autonomous self-driving vehicle software, which Ark says will be a huge value creator over the long term.
UiPath is another favorite for Wood, and not only is it the second-largest holding in ARKQ, but it's also the second-largest holding (on average) across all of Ark's ETFs. The company develops robotics automation software, which is a growing field within AI.
NYSEMKT: ARKQ
Key Data Points
Outside of ARKQ's top five holdings, other popular AI names in the ETF include:
- Nvidia, which makes the world's leading AI data center chips.
- John Deere, which makes farming equipment and is investing heavily in automation.
- Alphabet, which is home to Google and autonomous driving subsidiary Waymo.
The ARKQ ETF has delivered a return of 35% in 2023, so it's crushing the benchmark S&P 500 index, which is up only 21%. However, ARKQ is trading 44% below its all-time high, so it isn't immune to the volatility that comes with investing in new industries like AI.
But as more companies learn to monetize the technology, there's a good chance this ETF will continue to outperform the broader market over the long term.
2. Ark Innovation ETF (ARKK)
The Ark Innovation ETF (ARKK +1.53%) is Ark's flagship fund. It's actively managed, and it casts a much wider net than ARKQ, focusing on disruptive innovation across many different industries. Its core holdings develop everything from AI, robotics, healthcare technologies, and financial technologies (among others).
ARKK currently holds 33 stocks, and its top five account for 41.3% of the value of its entire portfolio:
|
Stock |
ARKK Weighting |
|---|---|
|
1. Coinbase (COIN +4.25%) |
10.56% |
|
2. Roku |
8.39% |
|
3. UiPath |
7.76% |
|
4. Tesla |
7.50% |
|
5. Zoom Video Communications |
7.12% |
Data source: Ark Investment Management. Portfolio weightings accurate as of Dec. 12, 2023, and are subject to change.
Wood is very bullish on the future of cryptocurrencies, which is why ARKK's top holding is Coinbase. It's benefiting from the rise in Bitcoin at the moment, as well as the troubles its top competitors -- FTX and Binance -- faced over the past 18 months. Coinbase stock soared 315% in 2023 as a result.
Like ARKQ, ARKK also has large positions in AI stocks like UiPath and Tesla. Outside of its top five holdings, other popular names in the ETF include:
- Roblox, which is a video game developer. It helps creators build new 3D experiences using generative AI.
- Shopify, which gives small businesses a cheap and easy way to create e-commerce websites for their products. It offers a suite of AI tools to help them automate workflows and create engaging content for their products.
- Teladoc Health, which is a telemedicine and virtual healthcare company. It's working with Microsoft to develop AI solutions to reduce the workload on doctors.
The ARKK ETF gained 58% in 2023, far outperforming both the S&P 500 and ARKQ. The significant gain in Coinbase stock is the main reason, but it's important to note that the ETF still trades 68% below its best-ever level from 2021. ETFs typically carry less risk than buying a handful of individual stocks in a similar industry, but investors should always remember they are not entirely immune to steep declines in value.
Nonetheless, ARKK is a great way for everyday investors to follow along with Cathie Wood's highest-conviction stock purchases.
