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The Ark Innovation ETF (ARKK) is up 35% year to date but has fallen 17% from recent highs.
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The Goldman Sachs Future Tech Leaders Equity ETF (GTEK) focuses on tech firms below $100B market cap with a weighted average of $72.4B.
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Both ETFs charge 0.75% expense ratios and use active management strategies.
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Nothing against the Ark Innovation ETF (ARKK), which is having a glorious year, now up more than 35% year to date and over 78% in the last two years. Undoubtedly, this current environment has been very kind to the disruptive innovators, including those that aren’t yet making a big profit.
While there have been subtle cracks in the growth trade in recent weeks, with the Nasdaq 100 slipping a bit off its high, thanks in part to pronounced weakness in some of the high-flyers that have flown a bit closer to earth of late, I still think the disruptive innovation and growth themes are worth sticking with for the next two to three years.
Now, that doesn’t mean we won’t face increased turbulence and perhaps the odd scare here and there, but I do think that the longer-term trend seems to be a big friend of the growth names, especially those with more than their fair share of exposure to AI. As it stands today, shares of the Ark Innovation ETF are down close to 17% from their recent highs.
As Cathie Wood of Ark Invest makes the most of the recent pullback by adding to positions in some of her favorite names, I do think that shares of the Ark Innovation ETF could be a smart buy at around $76 per share, a level where I see some pretty robust support. That said, there is one active tech ETF that I think might also be worth careful consideration on the way down.
Though the Ark Innovation ETF does stand out as “growthier,” with more explosive upside potential, the shares are also more volatile, with a beta of 2.41, which suggests a much more turbulent ride than the S&P, especially when the market encounters a bit of a growth scare. Whether it’s too soon to be a buyer for such a hot innovation ETF remains up for debate. If we are in the earlier innings of an AI decline, I would personally be more inclined to reach for an ETF like the Goldman Sachs Future Tech Leaders Equity ETF (NYSEARCA:GTEK) despite the recent relative underperformance to Ark’s flagship fund.
