Beyond risks with the portfolio, Morningstar’s Johnson and
Blue see issues for Ark tied “to the fact that the majority of its
assets are invested in fully transparent actively managed ETFs
[which] make it unique.”
The ETF wrapper Ark uses “has many investor-friendly
characteristics,” but it also “might be investors’ enemy,” they
explained. “The risk facing investors is that the same degree of
reflexivity that has seemingly benefited them on the way up is
likely to work against them on the way down.”
Wall Street loves a winner — and watching a winner fail. “Onthe one hand, Cathie and her team are the smartest analysts,and over the course of the last five years have had enormoussuccess generating alpha for clients,” said Nadig.
But on the other hand, the press is piling on as part of the “enter-tainmentizing” of the financial media, he says. Plus, some industry participants and watchers are engaging in Schadenfreude.
But Wood’s been through rough trading patches before and
holds tight to her convictions, despite volatility. As Arnott
points out, the AllianceBernstein fund she led was up 56% in
2009 and down 24% in 2011, “so I wouldn’t be surprised if we
saw similar performance swings here.”
Even so, Wood’s aura and style and Ark’s emphasis on inno-
vative and disruptive industries have captured investor inter-
est. On top of last year’s growth (from $3 billion to $50 billion
in assets), the ETF shop recently has been outpacing both
Vanguard and BlackRock iShares in net asset flows.
If investors keep piling in, Ark’s biggest problem might belosing the ability to invest in smaller stocks. “Mathematically,you can’t run a microcap [fund] with a trillion dollars. With$100 billion, they’re not going to take meaningful positionsin $50 billion companies,” Nadig said. “You can’t run an enormous microcap fund. That’s an oxymoron.”
Ginger Szala is managing editor of Investment Advisor Group. She canbe reached at email@example.com. Bernice Napach is senior writer andcan be reached at firstname.lastname@example.org.
9 Autonomous Ride-Hailing
These services could reduce the cost ofmobility to one-tenth the average costof a taxi today, dropping from $0.70 amile in 2016 to $0.25 a mile in 2025,spurring widespread adoption. Arkbelieves these platforms will generatemore than $1 trillion in profits per yearby 2030.
10 Delivery Drones
Lower battery costs and autonomoustechnology should power the use ofaerial drones, Ark says. It also believesdrones will deliver packages, food“and even people” faster in the nearfuture. Thus, drone delivery platformscould generate some $275 billion indelivery revenues, $50 billion in hardware sales and $12 billion in mappingrevenue by 2030.
11 Orbital Aerospace
Upon regulatory approval, Ark plans tolaunch a space-themed ETF and seesthis area’s opportunity — including satellite connectivity and hypersonic flight —exceeding $370 billion annually.
12 3D Printing
Ark notes that 3D printing collapses thetime between design and production,shifts power to designers and reduces supply chain complexity at a fraction of thecost of traditional manufacturing. Last year,despite being used for everything fromventilator valves to swabs to face masks,its revenues declined. However, Ark estimates 3D printing’s annual growth rate atroughly 60%, putting the industry at $120billion in 2025 vs. $12 billion in 2020.
13 Long Read Sequencing
Ark sees this next generation of DNAsequencing — and more accuratesequencing methods — as “the drivingforce behind the genomic revolution.”By the end of 2025, long-read sequencing should be on cost-parity with short-read sequencing. Long-read revenuescould grow 82% a year, with the marketset to hit $5 billion in 2025 vs. $250million in 2020.
14 Multi-Cancer Screening
A convergence of technologies has
pushed the cost of multi-cancer
screening — which detects dozens of
cancers by a single blood test — down
from $30,000 in 2015 to $1,500 in
2021; this might drop to $250 by 2025.
The market for multi-cancer screening could expand to $150 billion, whileaverting 66,000 cancer deaths peryear in the U.S.
15 Cell and Gene Therapy:
The next generation of cell and genetherapy could increase “the totaladdressable market for oncology therapeutics by more than 20-fold.” Anothertrend is the shift in gene therapiesfrom ex vivo (modifying a patient’scells outside of the body) to in vivo(doing it inside the body). In vivo ismore cost effective and could enablegene-editing — and hopefully curethousands of rare diseases over time.
Ark estimates that advances in cellularimmunotherapies could create $250billion in incremental revenues for theindustry going forward. —Ginger Szala
Source: Ark Investment Research“Big Ideas Report 2021”