Growth stocks in the S&P 500 are back and tech is hot — playing right into Cathie Wood’s hands. But even the famed investor can’t outperform a cheap index.
Wood’s flagship ARK Innovation ETF (ARKK) is having a good year — up 12.74%, making it the tenth-best diversified ETF this year. But the popular fund is still trailing behind the popular $167 billion-in-assets Invesco QQQ Trust (QQQ), which is up 17.3% this year, says Morningstar Direct.
And it’s not just this year that ARK Innovation is lagging the QQQ, which simply owns the 100 largest nonfinancial stocks trading on the Nasdaq. ARK Innovation also trails the Nasdaq 100 in both the past three and five years as well. And get this: QQQ only charges 0.2% annually, or 73% less than ARK Innovation’s 0.75% fee. That’s not to mention the cheaper version of QQQ, Invesco Nasdaq 100 ETF (QQQM), which costs just 0.15%.
“We have seen megacap companies found in growth ETF QQQ to be stronger performers in 2023 than more moderately sized companies more commonly found in disruptive technology ETFs,” said Todd Rosenbluth, director of research at VettaFi.
Rise Of Big Cap Tech
Why such a disconnect between ARK Invest and QQQ when growth is in again? Think big-cap tech, says Rosenbluth.
Just six stocks, all of which are also in the Nasdaq 100, are driving 80% of the S&P 500’s gains this year. That includes Apple (AAPL), Microsoft (MSFT), Meta Platforms (META), Nvidia (NVDA), Amazon.com (AMZN) and Alphabet (GOOGL). All are racing higher this year.
These six stocks also collectively account for 50% the value of the Nasdaq 100. But not one of them is in ARK Innovation. That omission is costly now. Take Meta, a social media giant that’s reorganizing itself to lower costs. Shares are up 99% this year, pushing the company’s value to $616 billion. That’s significant as it means Meta is now more valuable that Tesla (TSLA), which is ARK Innovation’s most important holding at 9.7% of the portfolio.
Tesla has done well, it’s up 22.7%, but it’s still lagging most of the Nasdaq giant. Apple, Nvidia and Amazon are up 29%, 85.5% and 30.9% respectively. The Nasdaq 100, which also owns Tesla, is up 14.11% and 14.82% in the past three and five years annualized. ARK Innovation is down 12% and 1% during the same periods
So while growth stocks are indeed back, they’re not all back equally. “Growth investing comes in many shapes and sizes and it is important for investors to understand what they own,” Rosenbluth said.
Biggest S&P 500 Gainers All Nasdaq Giants
None of the top performers this year are in ARK Innovation
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
