Photo by Timothy Newman on Unsplash

This week, Tracey is joined by Zacks Director of ETF Research, Neena Mishra, to discuss the intriguing comparison of ARK Innovation and the Energy ETFs in 2022.

ARKK v Energy ETFs

On past podcasts, Tracey and Neena have talked about Cathie Wood’s ARK Investment ETFS, especially Ark Innovation (ARKK - Free Report), the flagship fund which launched in 2014.

But in 2022, it’s the energy sector, for the second year in a row, which has been outperforming. The largest energy ETFs, the Energy Select Sector SPDR and SPDR S&P Oil & Gas Exploration & Production ETF are both up over 50% year-to-date, as they’re being driven by the big returns in Big Oil stocks like ExxonMobil and Chevron.

ARKK is a mirror of the Energy ETFs on performance, with shares down 50% year-to-date.

Yet more money continues to roll into the ARK Innovation ETF compared to the Energy SPDR ETF. In 2022, $1.6 billion has flowed into the flagship ARKK fund.

Is this a bullish, or bearish, signal for these ETFs?

Value Versus Growth ETFs

1.       ARK Innovation (ARKK - Free Report)

ARK Innovation, the flagship ARK Investment fund, was one of the big winning ETFs prior to the pandemic and in the first year after the pandemic began. In 2020, ARKK was up 152.5%. The money poured in as investors wanted a taste of Cathie’s investing magic.

But in 2021, and now again in 2022, ARKK has seen big declines. ARKK fell 23.4% in 2021 and is down 50% year-to-date in 2022. Even with that performance, the money is still coming in.

Cathie continues to add to her growth stock portfolio, even as the shares sink.

Is the worst now priced in with ARKK?

2.       Energy Select Sector SPDR (XLE - Free Report)

The Energy ETF covers the entire industry including producers, refiners and those in the service sector. However, the two largest holding in XLE are ExxonMobil (XOM - Free Report) and Chevron (CVX - Free Report). Combined, ExxonMobil and Chevron account for 43.7% of the XLE.

ExxonMobil is up 56.9% year-to-date while Chevron has gained 48.8%. They are driving this ETF higher. Both ExxonMobil and Chevron remain value stocks with forward P/Es of 9.6 and 10.5%, respectively.

If you want to own a basket of energy stocks, is XLE the way to go?

3.       SPDR S&P Oil & Gas Exploration and Production ETF (XOP - Free Report)

The Oil & Gas Exploration and Production ETF owns only the energy producers. It is an equal weight ETF so you won’t see a big concentration in ExxonMobil or Chevron, even though both are also in this ETF. It’s largest holding is Callon Petroleum which is 3% of the ETF.

Shares of XOP are up 61.3% year-to-date but unliked the Energy ETF (XLE), the outflows have been greater than the inflows, possibly as investors cash out profits.

Is all the good news already priced into XOP?

Running Length: 00:40:21