Page 35 - Investment Advisor April 2021

Beyond risks with the portfolio, Morningstar’s Johnson and holds tight to her convictions, despite volatility. As Arnott
Blue see issues for Ark tied “to the fact that the majority of its points out, the AllianceBernstein fund she led was up 56% in
assets are invested in fully transparent actively managed ETFs 2009 and down 24% in 2011, “so I wouldn’t be surprised if we
[which] make it unique.” saw similar performance swings here.”
The ETF wrapper Ark uses “has many investor-friendly Even so, Wood’s aura and style and Ark’s emphasis on inno-
characteristics,” but it also “might be investors’ enemy,” they vative and disruptive industries have captured investor inter-
explained. “The risk facing investors is that the same degree of est. On top of last year’s growth (from $3 billion to $50 billion
reflexivity that has seemingly benefited them on the way up is in assets), the ETF shop recently has been outpacing both
likely to work against them on the way down.” Vanguard and BlackRock iShares in net asset flows.
If investors keep piling in, Ark’s biggest problem might be
What’s Next losing the ability to invest in smaller stocks. “Mathematically,
Wall Street loves a winner — and watching a winner fail. “On you can’t run a microcap [fund] with a trillion dollars. With
the one hand, Cathie and her team are the smartest analysts, $100 billion, they’re not going to take meaningful positions
and over the course of the last five years have had enormous in $50 billion companies,” Nadig said. “You can’t run an enor-
success generating alpha for clients,” said Nadig. mous microcap fund. That’s an oxymoron.”
But on the other hand, the press is piling on as part of the “enter-
tainmentizing” of the financial media, he says. Plus, some indus- Ginger Szala is managing editor of Investment Advisor Group. She can
try participants and watchers are engaging in Schadenfreude. be reached at [email protected]. Bernice Napach is senior writer and
But Wood’s been through rough trading patches before and can be reached at [email protected].

Ark’s Big Ideas for 2021

9 Autonomous Ride-Hailing 12 3D Printing screening — which detects dozens of
These services could reduce the cost of Ark notes that 3D printing collapses the cancers by a single blood test — down
mobility to one-tenth the average cost time between design and production, from $30,000 in 2015 to $1,500 in
of a taxi today, dropping from $0.70 a shifts power to designers and reduces sup- 2021; this might drop to $250 by 2025.
mile in 2016 to $0.25 a mile in 2025, ply chain complexity at a fraction of the The market for multi-cancer screen-
spurring widespread adoption. Ark cost of traditional manufacturing. Last year, ing could expand to $150 billion, while
believes these platforms will generate despite being used for everything from averting 66,000 cancer deaths per
more than $1 trillion in profits per year ventilator valves to swabs to face masks, year in the U.S.
by 2030. its revenues declined. However, Ark esti-
mates 3D printing’s annual growth rate at 15 Cell and Gene Therapy:
10 Delivery Drones roughly 60%, putting the industry at $120 Generation 2
Lower battery costs and autonomous billion in 2025 vs. $12 billion in 2020. The next generation of cell and gene
technology should power the use of therapy could increase “the total
aerial drones, Ark says. It also believes 13 Long Read Sequencing addressable market for oncology thera-
drones will deliver packages, food Ark sees this next generation of DNA peutics by more than 20-fold.” Another
“and even people” faster in the near sequencing — and more accurate trend is the shift in gene therapies
future. Thus, drone delivery platforms sequencing methods — as “the driving from ex vivo (modifying a patient’s
could generate some $275 billion in force behind the genomic revolution.” cells outside of the body) to in vivo
delivery revenues, $50 billion in hard- By the end of 2025, long-read sequenc- (doing it inside the body). In vivo is
ware sales and $12 billion in mapping ing should be on cost-parity with short- more cost effective and could enable
revenue by 2030. read sequencing. Long-read revenues gene-editing — and hopefully cure
could grow 82% a year, with the market thousands of rare diseases over time.
11 Orbital Aerospace set to hit $5 billion in 2025 vs. $250 Ark estimates that advances in cellular
Upon regulatory approval, Ark plans to million in 2020. immunotherapies could create $250
launch a space-themed ETF and sees billion in incremental revenues for the
this area’s opportunity — including satel- 14 Multi-Cancer Screening industry going forward. —Ginger Szala
lite connectivity and hypersonic flight — A convergence of technologies has Source: Ark Investment Research
exceeding $370 billion annually. pushed the cost of multi-cancer “Big Ideas Report 2021”

APRIL 2021 INVESTMENT ADVISOR 33