Cathie Wood is one of the most prominent women fund managers in the world. She runs Ark Invest, an investment company she started in 2014.
In the past few years, the fund has grown surpassing $50 billion in assets under management, bringing her net worth to more than $250 million. Her flagship fund is known as Ark Innovation Fund (ARKK), which has over $22 billion under management.
In this article, we will look at the top five companies in the ARKK ETF.
What is the ARKK ETF?
ARKK is an actively managed exchange-traded fund made up of 55 companies. The fund invests in high-growth technology companies that promise to revolutionize the world.
Most of the holdings are loss-making companies that don’t pay a dividend. Since its inception, the fund has returned about 440%, making it a relatively successful fund.
A common criticism of the Ark Innovation Fund is that it is relatively expensive, as its expense ratio is 0.75%. The management fee is somewhat high in the ETF industry, considering that companies like Vanguard and Blackrock have funds with an expense ratio of less than 0.05%.
Let’s look at the biggest companies in the Innovation ETF.
Cathie Wood became highly popular because of her strong support of Tesla. Since its inception, the company has been in the ARKK fund and has played a major role in making it the fund it is today. ARKK’s stake in the company totals over 3.3 million shares that are worth around $2.2 billion.
There are several reasons why Wood loves Tesla. First, the company has a strong market share in the electric car industry. This means that other automakers will have difficult time dethroning the company in the near future. Second, the car manufacturer has the biggest charger network. As such, it will take years for other EV companies to create such a charge infrastructure.
Tesla vs ARKK
Third, she points to the fact that many countries like China and those in Europe have made plans of banning fossil fueled cars. The prominent fund manager estimates that Tesla will see substantial growth in the future. Further, the firm has diversified its manufacturing in key locations in the United States, Germany, and China. Such a strategy will help it sell more cars in major markets.
Teladoc Health (TDOC)
The health sector is one of the biggest industries in the world. As the country’s population continues to age, demand for health products will continue to grow. At the same time, due to the coronavirus pandemic, more people are considering online products.
Teladoc Health is a technology company valued more than $23 billion. In the past few years, the company has become the leading provider of online health services in the United States. It has thousands of doctors and serves millions of customers every year. In 2020, it acquired Livongo Health, a company that offers similar services.
ARKK holds more than 8.5 million shares of the company. Wood and the team believes that it has a substantial market share and that it will continue generating substantial profits as more people embrace virtual health care.
Teladoc vs ARKK
Roku is the third-biggest company in the ARKK portfolio. The fund owns more than 3.4 million of the company’s shares that are valued at over $969 million.
For starters, Roku is a company that sells a cheap stick that connects a television to the internet. The product competes with Google Chromecast and Amazon Fire TV. Still, while the company sells millions of TV sticks every year, the product represents a small portion of the overall business.
Instead, the firm makes most of the money selling advertisements. Indeed, it is one of the fastest-growing advertising companies in the United States. This is the main reason why Cathie Wood loves the company. She believes that its operating system will play an important role in ads as more people shift to streaming.
Roku has been a successful company since its initial public offering (IPO) in September 2017. The shares have surged, fossil-fueled surpassing 1,200%, becoming a top performer in the US. This trend will likely continue as cord-cutting intensifies.
Roku vs ARKK
Started by Jack Dorsey in 2009, Square has become one of the biggest financial services companies in the world, with a market cap of more than $100 billion.
The company has also diversified its business. Today, Square offers billions worth of corporate loans, a website building service through Weebly, and tax services through Credit Karma. It is also the biggest holder of Tidal, the music streaming service started by Jay Z. Further, the lender owns Cash App, a fast-growing peer-to-peer payments company.
ARKK owns over 4.22 million shares of Square worth more than $945 million. The fund believes that the company has a bright future as the payments industry continually shifts to digital. The financial services provider also expects that more businesses will become their customers in the future.
Square vs ARKK
Shopify is a Canadian company that helps people globally start their e-commerce stores. The firm’s product makes it easy for people to build their websites without doing any coding. It makes money by charging these companies a monthly fee and charges them a small commission for all products they sell.
Shopify has been on a strong growth path. It had seen its revenue surge from more than $383 million in 2016 to exceed $2.985 billion in 2020. It also made a net profit greater than $1.6 billion for the 12 months to the first quarter of 2021.
ARKK owns at least 685,000 shares of Shopify that are worth more than $748 million. Cathie Wood and the team believe that the company’s share price will keep rising as it continues to expand its market share. The fund also considers that Shopify will continue to generate durable and dependable revenue in the future.
SHOP vs ARKK
The ARKK fund is a controversial one. On the one hand, some investors believe that it will continue to outperform the market. On the other side, some believe the fund is an overvalued and expensive hype.
In this article, we have looked at some popular companies in the fund. Others that we have not mentioned are Spotify, Zoom, Coinbase, and Palantir, among others.