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This week, Tracey is joined by Zacks Director of ETF Research, Neena Mishra, to talk about Ark’s Cathie Wood and her flagship ETF as well as other hot popular actively managed ETFs.

Wood’s flagship, the ARK Innovation ETF (ARKK - Free Report), was the only Ark Invest ETF that saw positive cash inflows in 2022. It saw inflows of $1.2 billion on the year.  But $1.8 billion came in in the first 7 months of 2022 with $600 million flowing out in the last 5 months. Have investors soured on ARKK?

Shares are down 65.6% in the last year and now have a 5-year return of 3.5%.

Investors Loved Income in 2022

On the flip side, one of the most popular actively managed ETFs in 2022 for inflows was the JPMorgan Equity Premium Income ETF (JEPI - Free Report). It holds 125 stocks and is currently paying a 12-month yield of 9.64%.

Over the last year, shares are down 3.5% but that has outperformed the S&P 500 which is down 16% during that same time.

The key to both ETFs were the underlying stocks in the portfolio. What are the stocks behind the curtain of these two ETFs?

5 Stocks Behind 2023’s Popular ETFs

1. Exact Sciences Corp. (EXAS - Free Report)

In 2023, it is Exact Sciences that is the largest holding in Cathie Wood’s ARKK flagship ETF, and not Tesla. It is 9.7% of the portfolio.

Exact Sciences has been volatile the last 5 years. During the growth stock boom, Exact Sciences was one of the big winners. But Exact Sciences has fallen 54% in the last 2 years and is up just 14.2% over the last 5 years.

But in Jan 2023, Exact Sciences announced it would be profitable for all of 2023. The stock soared 25% on the news.

Is Exact Sciences turning the corner?

1. Zoom Video (ZM - Free Report)

Zoom Video is the second largest holding in the ARK Innovation ETF. It’s a 9.4% position.

Zoom Video was a pandemic winner as people worked from home. The stock soared. But once the reopening happened, the shares have taken a tumble. Zoom Video is down 79.7% in the last 2 years.

Is Zoom Video a deal or a trap in 2023?

1. Tesla (TSLA - Free Report)

Tesla is now the third largest holding in ARKK. It used to be the largest position in Cathie Wood’s flagship fund.

But Tesla shares have fallen 59.5% in the last 2 years. It’s now just a 6.9% position.

But with that fall, Tesla shares are now cheaper. It trades with a forward P/E of 24.5. Earnings are expected to rise 78% in 2022 and another 22% in 2023.

Is Tesla oversold to start 2023?

4.      AbbVie (ABBV - Free Report)

AbbVie is a top 10 holding in the JPMorgan Equity Premium ETF. It shouldn’t be surprising. It has been a favorite of income investors for years.

AbbVie is paying a dividend yielding 3.5%. The stock is cheap, with a forward P/E of 13.8.

Shares have rallied in the last year, gaining 18.4%. But earnings are expected to fall 15.6% in 2023.

Is the rally in AbbVie done?

5.      Exxon Mobil Corp. (XOM - Free Report)

Exxon Mobil is also a top 10 holding in the JPMorgan Equity Premium ETF. That’s not surprising as it has consistently paid out a dividend over many years.

Exxon Mobil is currently paying a dividend yielding 3.3%.

It was a top performing stock in 2022, with shares up 57% over the last year. Yet it’s still cheap, with a forward P/E of 10.4.

But Exxon’s earnings are expected to fall by 25% in 2023.

Should big oil companies, like Exxon Mobil, still be on your short list or is the bullish news already priced in?

What Else Do You Need to Know About ETF Investing to Start 2023?   

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