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2 Active ETFs For Diversified Long-Term Capital Appreciation

Published 28/06/2022, 09:23

Currently, only about a third of all 3,000 US-listed ETFs are actively managed funds. However, data from 2021 shows that those numbers have been growing dramatically; approximately 60% of new ETFs launched last year use such a strategy.

Institutional investors are interested in active ETFs across different asset classes. Therefore, we can expect to see an increased number of such funds, especially with a thematic focus.

Today’s article introduces two actively managed exchange-traded funds (ETFs).

ARK Innovation ETF

  • Current Price: $44.80
  • 52-week range: $35.10 - $132.50
  • Expense ratio: 0.75% per year

The first fund on today’s list is the ARK Innovation ETF (NYSE:ARKK), part of the family of funds offered by Cathie Wood’s Ark Invest. The fund, which was first listed in October 2014, invests in companies that fund managers regard to be at the center of disruptive innovation. Such businesses may offer:

“a technologically enabled new product or service that potentially changes the way the world works.”

It seeks long-term growth of capital.ARKK Weekly

ARKK, which currently holds 36 stocks, has net assets shy of $8.9 billion. In terms of sectoral allocations, we see health care (31.8%), information technology (30.5%), communication services (13.1%), consumer discretionary (12.7%), and financials (8.8%), among others.

Cloud computing tops the list of thematic focus offered by the fund. Then comes digital media, e-commerce, blockchain & P2P, gene therapy, mobile, big data & machine learning.

Close to 60% of the portfolio is held in the leading 10 stocks. Among them are the pandemic favorite Zoom Video Communications (NASDAQ:ZM); television streaming platform Roku (NASDAQ:ROKU); electric vehicle (EV) darling Tesla (NASDAQ:TSLA); Uipath (NYSE:PATH), which provides automation software; and gene-editing company Crispr Therapeutics (NASDAQ:CRSP).

ARKK hit a 52-week high about a year ago, on June 30, 2021. However, it lost over 63% in the past year and is also down close to 53% year-to-date.

Those contrarian investors who expect the declines in ARKK’s holdings to stop soon could consider buying into this actively managed fund now.

On a final note, we should also remind readers that in November 2021, Tuttle Capital Management introduced the Tuttle Capital Short Innovation ETF (NASDAQ:SARK). This actively managed ETF aims to achieve the inverse (-1x) of the daily returns of Cathie Wood’s ARKK fund. Thus, it could appeal to experienced traders looking for short-term opportunities. So far, in 2022, SARK is up close to 55%.

2. Invesco Active US Real Estate Fund

  • Current Price: $97.65
  • 52-week range: $91.34 - $120.85
  • Dividend Yield: 2.61%
  • Expense ratio: 0.35 % per year

From disruptive technology, we move on to real estate investment trusts (REITs). Recent metrics suggest around 145 million investors stateside put their money into REITs, which own over 500,000 domestic assets.

Therefore, our second fund for today is the Invesco Active US Real Estate Fund (NYSE:PSR) which invests in equity REITs. The fund was first listed in November 2008. PSR Weekly

PSR tracks FTSE NAREIT All Equity REITs Index and currently holds 81 stocks.

The leading 10 names comprise around a third of net assets of $124.2 billion.

American Tower (NYSE:AMT) and Crown Castle International (NYSE:CCI), which focus on communications real estate; SBA Communications (NASDAQ:SBAC), which operates tower structures used for wireless communications; Digital Realty (NYSE:DLR), which owns data centers as well as CubeSmart (NYSE:CUBE) and Life Storage (NYSE:LSI), which focus on self-storage facilities, are among the top stocks on the roster.

Like many sectors, most REITs saw a record high in late 2021. But since hitting an all-time high on Dec. 31.2021, PSR has lost 18.4%.

Rising interest rates have many headwinds for real estate. As a result, investors are becoming increasingly discerning when they look at REITs. Therefore, an actively managed fund like PSR deserves to be on your radar.

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