This Active ETF Is Working

Active management frequently takes some lumps, but even its most strident critics do not say 100 percent of actively managed funds are duds. There are always a few good apples in the barrel, regardless of asset class.

Unbeknownst to some internet investors, one of this year's best-performing exchange-traded funds for that particular market segment is an actively managed fund, the ARK ETF Trust ARKW. ARKW was one of the first two ETFs introduced two year's ago by ARK Investment Management, a New York-based asset manager with a reputation for unearthing story growth stocks prior to astronomical rises taking place.

Active Internet ETFs

ARKW “invests in companies that are transforming every sector of the economy, thanks to Internet enabled innovation. These changes cut across sectors and are accelerating thanks to social, mobile, and local technological breakthroughs, which are transforming consumer and business behavior,” according to ARK.

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ARKW's managers are earning their pay this year. The actively managed Web ETF was one of just five ETFs to hit all-time highs Tuesday. Interestingly, four of those ETFs, including ARKW, were internet funds. Impressively, ARKW is up 9.5 percent this year. That means the active internet ETF is topping the Nasdaq Composite by about 360 basis points and the largest internet ETF, a passive product, by nearly 100 basis points.

Weight And FANG

ARKW allocates 27 percent of its weight to cloud computing stocks while big data and e-commerce names combine for over a third of the ETF's weight.

“Companies within ARKW are focused on and expected to benefit from shifting the bases of technology infrastructure to the cloud, enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media,” according to ARK.

For investors looking for exposure to the FANG trade via ETFs, ARKW is suitable as, in this order, Amazon.com, Inc. AMZN, Netflix, Inc. NFLX, Facebook Inc FB and Alphabet Inc GOOG GOOGL combine for almost 20 percent of the ETF's weight.

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