ARK Genomic Revolution ETF

ARKG

Market cap $1.22B

While AI hype reigns on Wall Street, the healthcare sector is still far from the peaks it reached during the COVID-19 pandemic. And what's more important, many of the biotech stocks remain outside of Mr. Market's interest zone. Since the exclusivity of key blockbusters of 'giants', including Merck and Pfizer, expires in the next 4 years, there is an urgent need to continue rejuvenating their portfolios of drugs.

I maintain a hold rating on ARK Genomic Revolution ETF due to unprofitable top holdings, high operating costs, and limited approved treatments despite revenue growth. ARKG's high expense ratio and lack of dividend yield make it less attractive compared to peer genomic ETFs with better performance and lower fees. Top holdings like Tempus AI, CRISPR Therapeutics, and Twist Bioscience are either overvalued or struggle with profitability, limiting ARKG's upside.

Ark Invest CEO Cathie Wood is known for her stock picks over the last decade, handpicking many of the growth stocks that find their way into the company's ETFs.

I reiterate a soft buy rating on ARKG, despite recent sector weakness and mixed technicals, due to its rebound and improving valuation. ARKG stands out for its concentrated portfolio, high risk/reward profile, and focus on the genomics revolution, though it lacks a dividend yield. The ETF has rebounded 42% off April lows, outperforming the S&P 500, but faces seasonal headwinds and resistance near $28-$31.

It's probably time to give Cathie Wood the benefit of the doubt as the tides turn back in disruptive innovation's favor.

Outlook for pharma sector as Trump pushes for regulatory changes. The impact of tariffs on drugmakers.

Investors cooled to the healthcare sector in 2024, which dramatically trailed global and US equity markets for the year. any investors are now asking: how will the policy changes under a new US administration affect healthcare companies?

Wall Street was upbeat last week, despite the release of hot January inflation data.

Low-cost passive index investing (in the S&P 500 or Nasdaq 100) has been key to impressive results in recent years.

The Health Care Select Sector SPDR ETF (XLV) was up approximately 6% year-to-date as of January 29. While it is still early days, this performance is already twice as robust as the sector ETF's performance for all of 2024.