How to Invest in ARK Autonomous Technology & Robotics ETF (ARKQ)

While investors closely monitor Cathie Wood's stock picks, they also pay attention to the exchange-traded funds (ETFs) ARK Invest manages, like the ARK Autonomous Technology & Robotics ETF (ARKQ -2.24%). Since September 2014, the fund has been an option for growth-focused ETF investors.

The ARK Autonomous Technology & Robotics ETF provides diverse exposure to companies advancing autonomous technologies. Autonomous vehicles alone -- just one niche of the autonomous technology market -- are projected to experience considerable growth in the coming years.

For example, business intelligence firm Grand View Research estimates the autonomous vehicle market was valued at about $42.4 billion in 2022 and projects it will soar at a compound annual growth rate (CAGR) of 21.9% from 2023 to 2030.

What is it?

What is the ARK Autonomous Technology & Robotics ETF?

People familiar with Cathie Wood are well aware of her focus on innovative businesses, and those found in the ARK Autonomous Technology & Robotics ETF are no different. In managing the fund, ARK Invest selects businesses that are "expected to focus on, among other things, disruptive innovation in automation and manufacturing, transportation, energy, artificial intelligence, and materials."

Autonomous mobility stocks, including businesses focused on both the land and the air, depict the lion's share of the fund's holdings at about 45%. Representing around 11% each, companies specializing in intelligent devices, advanced battery technologies, and adaptive robotics are the next-largest positions in the ETF.

Although the ETF includes some micro-cap stocks (which ARK Invest defines as those with market capitalizations of $50 million to $300 million), most of the holdings are considerably larger. Mega-cap stocks (market caps over $100 billion), large-cap stocks (market caps of $10 billion to $100 billion), and medium-cap stocks (market caps of $2 billion to $10 billion) are most common, each representing about 31% of the portfolio.

For a different perspective on the stocks found in the fund, investors can look at the weighted average market cap, which is $255 billion.

How to buy

How to buy ARK Autonomous Technology & Robotics ETF?

Investors about to embark on their first rodeo with an ETF investment must take some basic steps to gain exposure to ARK Autonomous Technology & Robotics ETF, which trades under the stock ticker ARKQ.

Step 1: Open a brokerage account

A lifetime journey of building personal wealth through investing begins with a single step: opening a brokerage account. A little exploration on the internet will reveal several options, but inexperienced investors may be well suited to choose Fidelity, which offers $0 commission for online stock trades.

Step 2: Figure out your budget

Just as businesses must manage their finances carefully, investors must be mindful of their financial situations. Investors should create a budget, taking into account monthly expenses and allowing for money to fund savings accounts.

Step 3: Do your research

While investing in the ARK Autonomous Technology & Robotics ETF may have piqued your interest, it's important to have a thorough understanding of the fund before counting yourself among its investors. This means you'll have to do your due diligence to ensure the fund is a good fit for your investing goals.

Step 4: Place an order

With most of the legwork done, it's time to add the ARK Autonomous Technology & Robotics ETF to your portfolio. Once you've entered the ETF's ticker (ARKQ for the ARK Autonomous Technology & Robotics ETF) and chosen to buy the stock (instead of sell), you must decide whether to place a market order or a limit order.

Next, you'll have to decide on the size of your purchase, including whether you want to buy a fractional share, a single share, or hundreds of shares. The image below shows the process for buying stock through Fidelity.

Holdings

Holdings of ARK Autonomous Technology & Robotics ETF

With 37 holdings -- and about $792 million in assets under management -- in the ARK Autonomous Technology & Robotics ETF as of September 2024, the fund usually contains between 30 and 50 positions.

The five largest holdings represent the majority of the ETF's holdings. Tesla (TSLA -3.93%) holds the top spot, representing a 14.4% weight in the fund, while industrial equipment manufacturer Teradyne (TER -0.17%) and defense stock Kratos Defense & Security (KTOS -3.3%), a leading drone manufacturer, are the next two largest positions, representing 10% and 9.5%, respectively.

Satellite company Iridium Communications (IRDM 0.77%) and positioning specialist Trimble (TRMB -1.81%) round out the top five holdings. In total, the five largest positions in the ARK Autonomous Technology & Robotics ETF represent about 45% of the fund's positions.

Despite the heavy weighting of the top five stocks, investors gain exposure to a variety of other businesses with the remaining names found in the fund. For example, providing investors access to the rapidly growing space economy, Rocket Lab (RKLB -0.96%) is the eighth-largest position in the ARK Autonomous Technology & Robotics ETF.

Investors also gain exposure to another business looking to blossom in the wild blue yonder: Archer Aviation (NASDAQ:ACHR) is an upstart aviation company working to provide air mobility service to urban customers in the coming years.

Should I invest?

Should I invest in ARK Autonomous Technology & Robotics ETF?

Since investors' goals vary considerably, there's no absolute answer as to whether investing in the ARK Autonomous Technology & Robotics ETF is a good choice. With its considerable exposure to growth stocks, the ETF will more likely appeal to investors with multiyear investing horizons than to conservative investors who may have shorter investing horizons and won't view it as one of the best ETFs for them.

On the other hand, those with a higher tolerance for risk and who are eager to gain exposure to a rapidly growing industry may find the ARK Autonomous Technology & Robotics ETF especially enticing. Also, since the ETF doesn't provide a distribution, income investors will want to think twice before clicking the buy button.

Dividends

Does ARK Autonomous Technology & Robotics ETF pay a dividend?

Oftentimes, investors turn to dividend-paying ETFs to supplement their passive income. As of September 2024, people looking to generate steady income from their ETF investment will have to look elsewhere since the ARK Autonomous Technology & Robotics ETF doesn't pay a dividend.

Expense ratio

What is ARK Autonomous Technology & Robotics ETF's expense ratio?

Unlike Vanguard ETFs, which have extremely low expense ratios, the ARK Autonomous Technology & Robotics ETF is a little more costly to own. As of September 2024, the fund had a 0.75% expense ratio.

If you are considering an ETF or a mutual fund, it's important to be aware of the fees you'll be paying (if any) with an investment vehicle.

Historical record

Historical performance of ARK Autonomous Technology & Robotics ETF

The investment options that ETFs afford are considerable. While some ETFs may track an individual index, others may provide exposure to specific sectors.

Contrasting the objectives of these other ETFs, ARK Invest states that the ARK Autonomous Technology & Robotics ETF's goal is the "long-term growth of capital." To gauge the fund's success to this end, we can compare its performance to that of the S&P 500.

It's important to recognize, however, that the ARK Autonomous Technology & Robotics ETF just launched in September 2014, so the ability to assess its performance is limited.

The bottom line on ARK Autonomous Technology & Robotics ETF

People who count themselves among the early investors of the ARK Autonomous Technology & Robotics ETF have enjoyed significantly better returns than those who have only recently gained positions. It's important to acknowledge, though, that the industry is far from mature, and there's plenty of growth yet to be recognized from the burgeoning field.

Related investing topics

Consequently, investors who decide to gain positions in the ARK Autonomous Technology & Robotics ETF should be patient and not expect to recognize market-beating returns in the short term. Investors should also appreciate that the ARK Autonomous Technology & Robotics ETF is merely one option among many ETFs that could be worth holding for the long term.

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