Checking Out ARKK

Some smart people recommend a fairly recent and interesting actively managed ETF, ARK Innovation ETF.

Source: Yahoo Finance adjusted close for symbols ARKK, SPY and QQQ.

ARKK began trading in October 2014 and has a currently reported $1.6B in assets. ARK's investment objective is to actively invest in what they call "disruptive innovation". Check out this link to see how the fund describes itself. We will check out the fund performance to see how symbol ARKK stands against tradeable index ETFs, SPY and QQQ!

To start, the chart above looks pretty good but something happened in 2017 thru mid-2018. Let's look at the annual and rolling returns as of today's 5/29/2019 close:

Prior to 2017 and after 2018, ARKK looks like a decent actively managed ETF.  The spectacular gains occurred in the 2017-2018 period. Whether these gains can be replicated in future years is the question. Recent volatility is hurting ARKK much more than even the Nasdaq (as represented in the QQQs). The following table highlights this risk.

All of the above are based on continuously compounded rates of return. 

Unlike Mueller, this blog does make judgement calls and the call on ARKK is its an excellent high-risk performer (3 or 4 times the risk of the SPY and Qs). While slow out of the gate, it made spectacular gains mid-stride, with recent performance in line with the benchmarks.

I think its a great choice for high-risk non-index active investors. An index it is not.

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.