How to Invest in the ARK Innovation ETF (ARKK) #NewsETFs

With several exchange-traded funds (ETFs) that Cathie Wood’s ARK Invest manages to choose from, the options for growth investors may seem overwhelming. Fortunately for them, the ARK Innovation ETF (Sheet 3.46%) represents a one-stop shop where they can gain exposure to many of the market’s most disruptive companies.

Unlike some of the other ETFs under the ARK Invest umbrella that have narrower focuses, like the ARK Autonomous Technology & Robotics ETF (Casket 0.39%) and the ARK Space Exploration & Innovation ETF (Arkx 0.24%), the ARK Innovation ETF has offered exposure to a diverse range of innovative companies since the fund’s inception in October 2014.

What is it?

What is the ARK Innovation ETF?

According to ARK Invest, the ARK Innovation ETF is ideally suited for “[i]nvestors who seek to access companies at the forefront of technology-enabled innovation, in some of the most promising areas of the economy, with potential for long-term growth.” Typically keeping between 35 and 55 holdings, the ARK Innovation ETF had about $6.3 billion in assets under management as of the end of 2024.

The fund includes a diverse range of companies that are developing cutting-edge technological solutions. Intelligent devices represent the largest technology in the fund — 18% of the ETF’s holdings. Autonomous mobility and next-generation cloud stocks also hold prominent positions in the fund, representing 15% and 13%, respectively.

Large-cap stocks, which Ark Invest defines as those with market capitalizations of $10 billion to $100 billion) represent the greatest share of stocks in the ARK Innovation ETF, representing 42% of the portfolio. Mega-caps (market caps with more than $100 billion) and medium-cap stocks (market caps of $2 billion to $10 billion) are the next most common sorts in the fund, with weightings of 32% and 20%, respectively.

With a fairly equal weighting, the ETF covers numerous industries. The largest sector represented in the fund, communication services, for example, has a 20.6% weighting. Several other sectors have nearly equal weightings in the ARK Innovation ETF. Health care and consumer discretionary stocks have 20.3% and 19.6% weightings, while financials stocks have an 18.1% weighting and information technology stocks have an 18% weighting.

How to invest

How to buy ARK Innovation ETF?

While the companies in the ARK Innovation ETF are at the forefront of complex technologies, investors must only follow a few simple steps to make their ETF investments.

1. Open your brokerage app: Log into your brokerage account where you handle your investments.
2. Search for the stock: Enter the ticker or company name into the search bar to bring up the stock’s trading page.
3. Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
4. Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you’re willing to pay.
5. Submit your order: Confirm the details and submit your buy order.
6. Review your purchase: Check your portfolio to ensure your order was filled as expected, and adjust your investment strategy accordingly.

Holdings

Holdings of ARK Innovation ETF

As of early February 2025, the ARK Innovation ETF had 34 holdings — consistent with the usual 35 to 55 positions that it keeps. The largest position was electric vehicle (EV) stalwart Tesla (TSLA -0.03%), which had a 12.4% weighting. Streaming powerhouse Year (Year 14.14%) and Coinbase Global (COIN -7.98%), a familiar name in the realm of cryptocurrency, round out the top three positions with respective weightings of 8.9% and 7.9%.

In addition to Tesla, the ARK Innovation ETF offered artificial intelligence (AI) exposure in the top five holdings with Palantir Technologies (Fungus 1.06%) stock, which had a 6.8% weighting. With the 6.5% weighting of Roblox (RBLX 1.86%), the ARK Innovation ETF provided investors with exposure to the burgeoning online gaming industry.

Should I invest?

Should I invest in ARK Innovation ETF?

While some investors may jump at the opportunities that the ARK Innovation ETF provides, others might be less inclined to recognize it as their best ETF choice. In general, there are specific factors that investors should weigh to help them determine if this Cathie Wood ETF is right for them.

Certainly, the Ark Innovation ETF is a worthy choice for those enthusiastic about picking up exposure to a wide swath of growth industries. It’s still the very early innings for industries such as intelligent devices, as well as others represented in the fund — including humanoid robots, which have a 2% weighting. For those with multi-year investing horizons, this fund will interest those on the prowl for a long-term ETF to invest in.

The amount of risk investors are comfortable accepting is another critical consideration. Buying shares of disruptive technology companies has the potential to provide investors with outsized gains; however, it’s also possible that the lofty ambitions of the related companies are never realized, and their stocks go nowhere. Nonetheless, opting for an ETF with 34 holdings helps to reduce the risk of a single disruptive technology stock failing to prosper.

Investors often look to ETFs as another way to supplement passive income streams. At this time, the ARK Innovation ETF doesn’t reward investors with a distribution, so if generating passive income is a priority for you, it would be best to look elsewhere.

Dividends

Does ARK Innovation ETF pay a dividend?

Those committed to fortifying their financials with passive income sourced from a dividend ETF will have to comb the market for other options, as the ARK Innovation ETF didn’t provide investors with a dividend as of February 2025. Those familiar with Cathie Wood-backed ETFs shouldn’t find this especially surprising since none of the ARK Invest ETFs pay a dividend.

Expense ratio

What is ARK Innovation ETF’s expense ratio?

Although it’s not as expensive to own as another of ARK Invest’s funds — the ARK Next Generation ETF (ARKW -0.95%) has a 0.82% expense ratio — the ARK Innovation ETF still has a moderate cost of ownership with a 0.75% expense ratio. On a $10,000 investment, for example, you’ll pay $75 annually in fees.

If you’re debating between an ETF or a mutual fund (or another investment vehicle), it’s important to be mindful of the fees you may be charged. After all, we’re looking to maximize the returns on our investments, so pursuing investments with high expense ratios can reduce the profits we may otherwise enjoy.

Historical performance

Historical performance of Ark Innovation ETF

While some ETFs strive to match the performance of a certain index — such as one linked to a particular sector — the ARK Innovation ETF states that it has the broad goal of “long-term growth of capital.” To help gauge the degree to which the ETF has met this goal, we can measure its performance against the S&P 500.

Related investing topics

The bottom line on ARK Innovation ETF?

While there are several ARK Invest ETFs that provide exposure to disruptive companies, the ARK Innovation ETF is uniquely suited for investors interested in gaining exposure to a broad range of technologies and industries. Because it will likely take some time before these innovative companies flourish, investors should be mindful of the possibility that it may be many years — if at all — before they recognize market-beating returns from their investments in the ARK Innovation ETF.

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