It’s hard to ignore returns like these. However, it’s important to keep in mind that historic returns don’t predict future success. Just because a fund has experienced incredible returns over the past year or two doesn’t necessarily mean it will continue seeing those returns down the road. There’s no doubt that ARK’s ETFs have seen wild success in recent years. Its flagship ETF, the ARK Innovation ETF (NYSEMKT: ARKK), has experienced a staggering 175% return over the past 12 months. The ARK Genomic Revolution ETF (NYSEMKT: ARKG), which focuses on stocks in the gene editing and healthcare sectors, has earned a 186% return over the past year.
One of the biggest risks of investing in ARK ETFs is that they don’t have a long track record. The firm itself was founded in 2014, and some of the ETFs were only established within the last year or two. That makes it difficult to determine how these funds will perform over the long run.
Source fredericksburg.com Also, keep in mind that in general, the higher returns a fund sees, the higher the risk as well. ARK’s goal is to invest in the most innovative, cutting-edge companies. While those companies sometimes experience explosive growth, they’re also more volatile and riskier than well-established companies.
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