The ARK Innovation ETF (ARKK), spearheaded by ARK Invest under the leadership of Cathie Wood, stands as the premier actively managed fund. Demonstrating a remarkable ability to outperform the market, the advisory firm, in contrast to many stock pickers, boasts an impressive track record.

Ark Invest, after a period of cutting and waiting, is expanding its Tesla, Inc. (TSLA) holdings, acquiring 105,201 shares valued at approximately $25 million. The strategic move spans Ark's Next Generation Internet ETF (ARKW) and the flagship ARKK, with the latter securing 91,194 TSLA shares.

That being said, Ark Invest has increased its TSLA holdings for the second time in recent weeks, acquiring approximately 111,000 shares on December 21, followed by an additional 105,201 shares.

This move aligns with TSLA’s 2023 delivery and production figures, with 1.81 million vehicles sold throughout the year, including 484,507 in the last quarter, meeting Wall Street forecasts.

Moreover, in April of last year, Ark Invest projected TSLA’s shares to reach $2,000 by 2027, anticipating a valuation surge driven by the widespread adoption of the company's yet-to-be-launched robotaxi service. This could bode well for the ETF’s gains.

Analysts anticipate significant growth in eight stocks within the ARK Innovation portfolio, projecting a 50% or more increase in the next 12 months. Overall, analysts have expressed favorable views on Wood's selections in the 34-stock portfolio, foreseeing an average gain of nearly 30% across these stocks within the same timeframe.

Furthermore, Ark Invest, vying for a bitcoin ETF spot, awaits the SEC's decision. Cathie Wood is optimistic, foreseeing approval in January. Despite potential short-term selling post-approval, she believes institutional investments attracted by ETFs will sustain and uplift bitcoin prices in the long run, characterizing the outlook as bright.

ARKK has gained 53.9% over the past year to close its last trading session at $48.91.

Here are the factors that could affect ARKK’s performance in the upcoming months:

Strong Fund Stats

ARKK has $8.88 billion in Assets Under Management (AUM). The ETF has a Net Asset Value (NAV) of $48.90 as of January 4, 2024. Its expense ratio is 0.75%, which compared with the industry average of 0.50%.

In addition, ARKK's net fund flows during the last three months totaled $170.11 million. Furthermore, its net inflows over the last month totaled $126.24 million.

Top Holdings

The fund’s top sector is Technology Services, with 41.41% weight, followed by Health Technology, with 19.89%; Consumer Durables, with 14.91% weight; Finance, with 13.47% weight; and Health Services, with 5.58% weight.

ARKK’s top holdings include Coinbase Global, Inc. (COIN) with a 10.49% weight, TSLA with a 7.70% weight, Roku, Inc. (ROKU) with a 7.21% weight, UiPath, Inc. (PATH) with a 7.05% weight, and Zoom Video Communications, Inc. (ZM) with a 6.89% weight.

POWR Ratings Reflect Promise

ARKK’s robust fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

ARKK has a grade A for Trade. In addition, the ETF has a B grade for Buy & Hold. It is ranked #57 out of 119 ETFs in the B-rated Technology Equities ETFs group,

Click here to see the additional POWR Ratings for ARKK (Peer). 

Bottom Line

ARKK could benefit through expanded TSLA holdings aligned with stellar delivery figures. Furthermore, Ark Invest's optimistic outlook on a potential bitcoin ETF approval enhances the fund's prospects, foreseeing sustained institutional investments to buoy cryptocurrency prices.

In addition, considering ARKK's robust fund statistics, exceptional price performance, and substantial growth potential, investing in this ETF now appears prudent for potential gains.

How Does ARK Innovation ETF (ARKK) Stack Up Against Its Peers?

While ARKK has an overall POWR Rating of B, one could consider looking at its Technology Equities ETFs category peers with an A (Strong Buy) rating: Vanguard Information Technology Index Fund (VGT), Technology Select Sector SPDR Fund (XLK) and iShares U.S. Technology ETF (IYW). Click here to explore more ETFs in the Technology Equities ETFs category.

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ARKK shares were trading at $48.81 per share on Friday morning, down $0.10 (-0.20%). Year-to-date, ARKK has declined -6.80%, versus a -1.34% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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