ARK Invest Fund Features Financial Technology

Financial technology, or fintech, is a relatively new and growing part of the market.

It features interesting companies that transform the way in which we engage in transactions, as well as how financial processes are handled on a business-to-business level. One way to gain exposure to this theme is through the actively managed exchange-traded fund ARK Fintech Innovation ETF (ARKF).

This fund seeks to be on the cutting edge of new technology in this space. According to ARK Invest, fintech innovation companies include those involved in transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer-facing platforms and new intermediaries, among other areas.

All these themes, of course, have the potential to create hugely profitable ventures. While the blockchain craze has largely died down, there still are companies that are legitimately engaged with the technology as a source of profit.

Financial technology may be a more interesting theme than companies that have, as was popular a few years ago, simply appended “blockchain” to their names to attract investors. The largest position in this fund by far is Square Inc. (SQ), the maker of small card readers for small businesses. The company’s technology has become ubiquitous over the past few years, and shareholders have profited handsomely.

This fund is up by about 20% over the last year. It currently trades at a small premium to net asset value (NAV), as usual, and has an expense ratio of 0.75%. With assets under management of just $83 million, this fund falls below my recommended threshold for investment, but its strategy is an interesting one that merits bringing to your attention. As you can see below, ARKF has powered upward since October, leaving its moving averages in the dust.

Chart courtesy of Stockcharts.com

Top holdings for this fund include Square In. (SQ), 10.68%; Tencent Holdings (TCHEHY), 5.28%; Apple Inc. (AAPL), 4.77%; MercadoLibre Inc. (MELI), 4.48% and PayPal Holdings Inc. (PYPL), 4.00%.

New investment themes for investors to consider are always interesting. If you believe that the frontier of fintech is a promising source of further upside, ARK Fintech Innovation ETF (ARKF) may be a fund worth considering for possible investment.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.