Cathie Wood has generated huge profits from her investments in industry-disruptive stocks over the past year. Although current market volatility has shaken some investors’ confidence in this class of stocks, we think the long-term growth prospects of the target industries of ARK Innovation (ARKK), ARK Next Generation Internet (ARKW), and ARK Fintech Innovation (ARKF) should enable these ETFs to deliver significant returns over the long term. So. let’s take a closer look.

Renowned investor Cathie Wood is the founder and CEO of the world’s largest actively traded ETF management company, Ark Investment Management LLC. Ark’s ETFs have been some of the best performing ETFs in 2020, driven by Wood’s bets on “disruptive innovation” in the burgeoning electric vehicles (EV) and biotech industries.

However, investors’ current focus on outdoor stocks that are benefiting from surging reflation trades has caused Wood’s ETFs to decline over the past couple of months. Nevertheless, we think Wood’s strategic investment bets on companies with explosive growth potential are likely to reap substantial returns long term.

Therefore, we expect currently sagging  ETFs ARK Innovation ETF (ARKK), ARK Next Generation Internet ETF (ARKW), and ARK Fintech Innovation ETF (ARKF) to deliver solid returns over the long run.

ARK Innovation ETF (ARKK)

In pursuit of long-term capital growth, ARKK invests primarily in domestic and foreign equity securities of companies that are relevant to the fund's investment theme of disruptive innovation. Its investments in foreign equity securities can be in developed and emerging markets. ARKK has $22.13 billion in assets under management. The ETF’s major holdings include Tesla, Inc. (TSLA), Roku, Inc. (ROKU), and Teladoc Health, Inc. (TDOC).

ARKK has a 0.75% expense ratio, which is higher than 0.52%  category average. It also has a BBB MSCI ESG Fund Rating. The ETF distributes $2.04 in dividends annually, which translates to a 1.73% . Its four-year average dividend yield is 1.24%. The ETF’s net inflows have totaled  $134.09 million over the past month.

However, the fund has lost 6.5% year-to-date. But it is currently trading at $117.46, which is 26.4% below its 52-week high of $159.70. The ETF has gained 43.8% over the past year and 13.2% over the past nine months.

Of the 113 ETFs in the A-rated Technology Equities ETFs group, ARKK is ranked #72 in our POWR Ratings system.

ARK Next Generation Internet ETF (ARKW)

ARKW seeks to benefit from shifting the bases of technology infrastructure from hardware and software to the cloud, enabling mobile and local services. The fund invests at least 80% of its assets primarily in domestic and foreign equity securities of companies that are relevant to the fund's investment theme of next-generation internet. ARKW has $5.76 billion in assets under management. The ETF’s major holdings include Tesla, Inc. (TSLA), Twitter, Inc. (TWTR), and Shopify, Inc (SHOP).

ARKW has a 0.79% expense ratio, which is higher than the 0.37% category average. It also has a BBB  MSCI ESG Fund Rating. The ETF distributes $1.89 in dividends annually, which translates to a 1.32% dividend yield. Its four-year average dividend yield is 3.4%. The ETF’s net inflows amounted to $146.76 million over the past month.

ARKW has declined  3.7% year-to-date and is currently trading at $140.73, which is 26.4% lower than its 52-week high of $191.13. The ETF has gained 48.9% over the past year and 18.3% over the past nine months.

The ETF is ranked #73 in the  Technology Equities ETFs group.

Click here to check out our Cloud Computing Industry Report for 2021

ARK Fintech Innovation ETF (ARKF)

ARKF aims to pick the winners in financial technology, such as blockchain, transaction innovation, and customer platforms. The fund invests at least 80% of its assets in domestic and foreign equity securities of companies within this theme. ARKF has $3.81 billion in assets under management. The ETF’s major holdings include Square, Inc. (SQ), Shopify, Inc (SHOP), and PayPal Holdings, Inc. (PYPL).

ARKF has a 0.75% expense ratio, which is higher than the 0.37% category average. It also has a BBB MSCI ESG Fund Rating. The ETF distributes $0.19 in dividends annually, which translates to a 0.36% dividend yield Its four-year average dividend yield is 0.08%. The ETF’s net inflows amounted to $34.75 million over the past month.

ARKF is currently trading at $51.12, which is 20.7% below its 52-week high of $64.49. The ETF has gained 50% over the past year and 19.6% over the past nine months. It has declined  6.4% over the past six months.

ARKF is ranked #74 in the  Technology Equities ETFs  group.

Click here to check out our Software Industry Report for 2021

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ARKK shares were trading at $116.48 per share on Friday afternoon, up $0.08 (+0.07%). Year-to-date, ARKK has declined -6.43%, versus a 16.16% rise in the benchmark S&P 500 index during the same period.

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About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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