How ARKK has Outperformed/Underperformed the S&P500: 2014-2022
Updated: Mar 10, 2022
UPDATED MARCH 2022
As of Feb 2021, ARKK has averaged a +21.64% YoY return since 2014.
During the first 2 years, it averaged the performance of the S&P500.
It is down -20.26% YTD after Feb 2021 Tech correction.
It was up +152% YTD in 2020 after bouncing up from -30% in the March 2020 market crash.
TSLA has been in and out of the top holdings multiple times, although the last bet after Cybertruck's announcement has been crucial for 2020 performance results.
I'm not used to writing this kind of article, but long-term investing plays a heavy load on the financial success "side" of any entrepreneur. At the same time, this article can be useful for any other ETF (or more precisely ARK) investor. Although it won't be the regular "investing" content structure you may find elsewhere, I hope it serves you to better understand the ARKK fund and how it has behaved over the past few years.
What is ARKK?
For those who don't know about it, ARKK is an "active ETF" launched in 2014 by ARK Invest and managed by Catherine Wood. As described on the fund page:
ARK defines ‘‘disruptive innovation’’ as the introduction of a technologically enabled new product or service that potentially changes the way the world works.
ARKK is an actively managed ETF that seeks long-term growth of capital by investing under normal circumstances primarily (at least 65% of its assets) in domestic and foreign equity securities of companies that are relevant to the Fund’s investment theme of disruptive innovation.
I won't go into much detail, as you can find every info related to the way ARKK works here.
Historical Holdings Movement
The ARKK ETF, like all other ARK Invest's funds, is very easy to track when it comes to the holding structure. This is somehow unusual, but one of the most important aspects of how Catherine Wood's team encourages transparency and manages the fund. You can even subscribe to a daily email with a summary of all buy/sale operations within the funds.
In the following section, with the purpose of understanding how variable ARK structure is for identifying disruptive innovation opportunities, I leave a list of the top 6 holdings of ARKK for some key moments over the past 5 years:
ARKK Top Holdings in March 2022 - After the selloff & during Russia-Ukraine conflict
9.80% TESLA INC
6.91% TELADOC HEALTH INC
6.38% ROKU INC
6.07% ZOOM VIDEO COMUNICATIONS
5.96% COINBASE GLOBAL-INC
ARKK Top Holdings in April 2021 - Before the big selloff
11.66% TESLA INC
7.02% SQUARE INC
6.08% TELADOC HEALTH INC
5.99% ROKU INC
3.78% ZILLOW GROUP
ARKK Top Holdings in Feb 12th 2021 - All-Time High so Far
8.75% TESLA INC
6.97% ROKU INC
5.21% TELADOC HEALTH INC
4.89% SQUARE INC
3.55% CRISPR THERAPEUTICS AG
ARKK Top Holdings in October 2020 - Before U.S. Presidential Election
10.22% TESLA INC
7.57% INVITAE CORP
6.58% SQUARE INC
5.86% ROKU INC
5.03% CRISPR THERAPEUTICS AG
3.40% PROTO LABS INC
ARKK Top Holdings in March 2020 - COVID Market Crash
9.62% TESLA INC
7.58% STRATASYS LTD
7.08% PROTO LABS
6.91% XILINX INC
5.54% 2U INC
4.91% MATERIALISE NV-ADR
ARKK Top Holdings in Oct 2019 - pre-Tesla Cybertruck
8.76% SQUARE INC
6.23% APPLE INC
5.99% TENCENT HOLDINGS LTD
4.13% ALIBABA GROUP
ARKK Top Holdings in September 2017
5.83% TESLA INC
5.43% BITCOIN INVESTMENT TRUST
4.28% AMAZON.COM INC
4.19% ATHENAHEALTH INC
4.12% TWITTER INC
4.00% STRATASYS LTD
ARKK Top Holdings in April 2016
8.71% STRATASYS LTD
7.31% ATHENAHEALTH INC
7.21% ILLUMINA INC
7.05% TESLA MOTORS INC
4.52% AMAZON.COM INC
4.20% NETFLIX INC
ARKK Top Holdings in February 2015
7.69% TESLA MOTORS INC
4.91% STRATASYS LTD
4.49% ATHENAHEALTH INC
4.15% TWITTER INC
3.66% AMAZON.COM INC
3.62% ILLUMINA INC
The 4 Major Performance Periods
During the period starting in December 2014 and ending in March 2022, the moment of "updating" of this article, this has been the performance of ARKK compared to the most popular U.S. market indexes:
ARKK - 187%%
Nasdaq100 - 172%
S&P500 - 108%
U.S. Stock Market - 64%
Dow Jones - 88%
ARKK has greatly outperformed the market, but to better understand how and when, then we need to analyze the different periods where it has done so. Starting from this Yahoo Finance graph, I separated the following performance periods by comparing the ARKK return with the one from the S&P500:
Inception 2014 to early 2017 - Average returns: if someone would ask me back then if buying ARKK was a good idea, just by analyzing their past performance would have been a red flag.
Q2 2017 to early 2019 - Outperformed the S&P: this was the first period of outperformance by ARKK. It almost doubled the performance of the stock market for an average of +20% Year over Year(YoY) since inception.
Early 2019 to 2020 crash - Average returns: during the year 2019, the
2020 crash to February 2021 - Huge outperformance: Probably due to the high exposure to TSLA and the tech stock that surged during the pandemic recovery. The YoY average has risen to +31% since inception, something that has put ARKK in the center of attention of the ETF world.
February 2021 to March 2022: Huge underperformance. While tech expectations faded, ARKK took a great
The four main performance periods of ARKK compared to the S&P500 index 2015 to Oct 2020 period.
The underperformance period of ARKK compared to the S&P500 index from February 2021 to March 2022.
The Year over Year retrospective
As mentioned before, the year 2020 has obviously played a key role in the YoY performance for ARKK. If we were to analyze it standing on a specific moment on time, back in 2016 and after 2 years of inception, the actual returns of the ARKK strategy wouldn't have surprised anyone. As mentioned in the previous section, the S&P500 outperformance period came right after that initial 2-year period. Who could new it back then?! That's why it needs to be analyzed as a whole:
March 2022 Past Performance Numbers
September 2020 Past Performance Numbers
June 2019 Past Performance Numbers
December 2016 Past Performance Numbers
Should I then Buy ARKK?
If you believe in active investing, you probably should. Active trading, day trading and even swing/short operations require a lot of time and commission expenses from your end that could be somehow be replaced by looking for a more "steady" although still a volatile alternative.
The real question is how much are you willing to expose to it. I consider myself an ETF investor and, although I have never purchased an individual stock in my life, if getting exposure to specific sectors were to be part of my investment strategy, I would add some of it. Doing a 5% - 10% exposure may not sound too crazy and I would suggest then doing so in non-registered/brokerage accounts, more than in registered ones.
Just remember that, although your funds are backed up by the underlying holdings of the ETF, you will always be buying on ARK Invest capacity to manage those holdings. Either way, at least you have an idea now of how they publish their moves, how it has worked for them so far and how it reflects in the returns.
Now, that said, I personally have no exposure to ARKK investing ETFs. I'm a big believer in indexing and diversification.
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Disclaimer: None of the data I've shared here is a guarantee of future results, but definitely the ARK Invest teams have managed to do great. This post or blog is not related/sponsored to ARK Invest and none of it is a piece of investment advice. Invest at your own risk.