ARK Autonomous Technology & Robotics ETF

ARKQ

Market cap $2.04B

Most people gravitate to index funds due to their simplicity and low fees. While most active ETFs fail to keep up with indices, that's not true about every actively managed fund.

A merger between SpaceX and xAI has all eyes on companies led by Elon Musk with reports that the billionaire could also be eyeing a tie-up with Tesla Inc (NASDAQ: TSLA).

Ark Invest, led by Cathie Wood, issued another "Big Ideas" list on Wednesday, sharing themes for 2026 that investors should watch. This year's list comes after the firm reported a strong 2025, with its ETFs outperforming the S&P 500.

As time goes on, I've started to focus more on building ETF positions and less on individual stocks. I'm planning to buy shares of two ETFs to capitalize on mispriced small-cap stocks and interest rate tailwinds.

Ark Invest had a 2025 to remember, with ETFs from the Cathie Wood-led financial company outpacing the S&P 500's full-year gains. Here's a look at the gains for the six main Ark Invest ETFs and how they compare to the S&P 500, along with a look at top holdings in the top-performing funds.

Thematic investors are split between two big future bets: robotics and electric vehicles.

The Vanguard Russell 2000 ETF looks extremely attractive as we head into 2026. Real estate could be a big winner as interest rates fall, and the Vanguard Real Estate ETF is on my buy list.

The ARK Autonomous Technology & Robotics ETF (ARKQ) offers tactical trading potential amid renewed AI/robotics enthusiasm, but long-term risk remains elevated at current valuations. ARKQ's concentrated portfolio — top 8 holdings comprise half the fund — mirrors broader market risk-on/risk-off dynamics, with high volatility and limited long-term outperformance versus QQQ. Valuations are stretched, with ARKQ trading at 52x trailing earnings and 14x sales, making it more suitable for short-term trades than core long-term allocations.

ARKQ trades at an average 89.78x P/E (equal-weighted), far above the NASDAQ, making it extremely expensive. Holdings grow EPS by 17.6% annually, below top tech leaders, yet the ETF's P/E is roughly twice as high. Only 84% of holdings are profitable, with cash-burning companies excluded from my P/E calculation.

The incredible success of some of the top holdings in the ARK Autonomous Technology & Robotics ETF has propelled it to strong gains this year. The ETF is on track to generate returns of at least 30% for a third straight year.