5 Stocks That Make Ark Innovation ETF (ARKK) Red Hot

Ark Investment Management founder Cathie Wood has been seeing massive money flowing into five of the seven ETFs lineup in recent months. Ark Innovation ETF (ARKK Quick Quote ARKK - Free Report), which is the second top asset creator of this year, is red hot, just behind Vanguard S&P 500 ETF (VOO Quick Quote VOO - Free Report). The ETF has pulled in about $5.3 billion in the capital so far this year, bringing its total AUM to $28 billion.

ARKK in Focus

It is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements, and advancements in scientific research related to the areas of DNA technologies (Genomic Revolution), industrial innovation in energy, automation, and manufacturing (Industrial Innovation), the increased use of shared technology, infrastructure and services (Next Generation Internet), and technologies that make financial services more efficient (Fintech Innovation).

In total, the fund holds 55 securities in its basket with none of them accounting for more than 9% share. Healthcare and information technology take the largest share at 31.5% and 29%, respectively while communication services and consumer discretionary round off the next two spots. The fund charges 75 bps in annual fees and trades in an average daily volume of 6.2 million shares.

What’s Behind the Popularity?

The popularity has been driven by its “innovative strategy” that took flight amid the pandemic, which changed the consumer landscape and business trends all over the world. The ETF is centered around the idea of “disruptive innovation,” which is defined as the introduction of a technologically-enabled new product or service that potentially changes the way the world works.

Additionally, the bullish bets on Tesla (TSLA Quick QuoteTSLA - Free Report) and the crazy run of bitcoin continued to drive investors’ interest in ARKK. The bitcoin, the largest cryptocurrency, topped $51,000 for the first time ever and is up 73% so far this year. ARK believes bitcoin’s rapid growth has positioned it for an allocation in investment portfolios. Last week, Tesla announced its plan to begin accepting cryptocurrency as a form of payment in the near future.

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