ARK Invest has become a top 10 ETF issuer on the strength of its suite of actively-managed next-gen innovative disruption themed funds. While tech and internet stocks continue to lead the market higher, ARK has delivered for investors and the heels of savvy stock picking and a transparent in-depth research process.
Five ARK ETFs generated gains of more than 100% in 2020, led by the ARK Genomic Revolution ETF (ARKG) gain of 180%.
2021 has gotten off to a similar fast start for the ARK ETFs with all 7 funds posting double digits gains again in the year's first few weeks, including the company's headliner, the ARK Innovation ETF (ARKK).
But neither of those funds are doing nearly as well as ARK's best performer so far in 2021. In fact, none of them have close to keep up with ARK's early leader, the 3D Printing ETF (PRNT).
PRNT doesn't get a whole lot of attention with its relatively modest $130 million in assets, a scant 0.2% of ARK's total assets under management. The fact that it's the only ARK ETF that doesn't have ARK in its name isn't helping and feels like a missed opportunity. PRNT was nearly ARK's biggest fund a few years ago when the company was just gaining its footing, but quickly got left behind when its actively-managed suite of ETFs took off.
3D Printing ETF
PRNT is different from most of the other ARK funds in that it tracks an index instead of being actively-managed (the ARK Israel Innovative Technology ETF (IZRL) is the other).
3D printing was one of the hot new technologies just a few years ago. The idea was hot, but the stock performance never was, which contributed to its lack of asset growth. At the bottom of the 2020 COVID bear market, PRNT was actually down nearly 30% since its 2016 inception. Since then, the fund has been on fire gaining just short of 200% in the past 10 months and roughly 34% year-to-date.
According to fund literature, PRNT targets companies that are engaged in 3D printing related businesses within the following business lines:
- 3D printing hardware
- computer aided design (“CAD”) and 3D printing simulation software
- 3D printing centers
- scanning and measurement
- 3D printing materials
The company noted that PRNT did very well in the recent quarter:
PRNT outperformed relative to the broad- based market indexes. SLM Solutions (SLM) was the largest contributor after reporting an 11% sequential increase in third quarter sales and announcing that its new laser metal 3D printer, the NXG XII 600, was 20x faster than its predecessor. Exone (XONE) was the largest detractor from performance, for reasons noted above.
Because of its relatively narrow focus, PRNT has almost no overlap with ARK's other ETFs. It shares about 15% of holdings with the ARK Autonomous Technology & Robotics ETF (ARKQ), but that's far and away the most significant overlap.
Outlook For PRNT
Based on returns over the past year or so, PRNT had perhaps a little catching up to do with other next-gen technologies, but it'd be unfair to call it an underperformer.
The big question now is whether 3D printing is more hype or more practical application. We've heard about the potential for 3D printing for a while - medical technology, including artificial organ development, construction, industrial design, etc. - but overall the technology has been relatively slow to adopt.
I imagine 3D printing may take a few more years to reach its potential, but it's still on its way. The fund's 34% return early on in 2021 is reflective of its potential, but the sector will need to begin delivering bigger wins in order to achieve sustainable returns going forward.