Investing in AI with the Ark Autonomous Tech & Robotics ETF
Published Date : 11/01/2025
Most AI ETFs are concentrated in well-known mega-cap tech stocks. However, the Ark Autonomous Technology & Robotics ETF (ARKQ) stands out by investing in lesser-known but promising AI firms.
If you’re looking to invest in artificial intelligence (AI) but don’t want to pick individual stocks, I don’t blame you.
Picking the right AI stocks can be daunting, even for seasoned investors.
In my portfolio of around three dozen stocks, I only consider two as 'AI plays,' and even those aren’t pure-plays—just businesses that could benefit from AI advancements.
Instead of diving into individual AI stocks, you might want to consider an ETF.
However, most AI ETFs are heavily weighted towards the same mega-cap tech giants.
The Ark Autonomous Technology & Robotics ETF (ARKQ) offers a different approach.
A Different Approach to AI InvestingThe Ark Autonomous Technology & Robotics ETF (ARKQ) is unique in the world of AI ETFs.
Unlike most funds that aim to match an AI stock index, this ETF is actively managed by Cathie Wood, a renowned tech investor.
The goal is to outperform benchmark AI indexes by carefully selecting and analyzing stocks.
This active management results in a more concentrated portfolio, with just 35 stocks.
What’s more, the list of stocks in this ETF doesn’t resemble the typical holdings of major AI index funds.
For example, the iShares Future AI & Tech ETF (ARTY) and the Invesco AI and Next Gen Software ETF (IGPT) have their top positions in companies like Nvidia, Alphabet, and Meta Platforms—big tech players that you can get exposure to through broader tech ETFs.
In contrast, ARKQ takes a more specialized and diverse approach.
Lesser-Known AI StocksWhile Tesla (TSLA) is the top holding in ARKQ, the rest of the top five includes companies you might not have heard of
- Teradyne (TER) A $23 billion market cap robotics company.- Kratos Defense & Security (KTOS) A $4 billion market cap company that develops products and software for the defense industry.- Rocket Lab USA (RKLB) A $14 billion market cap company that specializes in spacecraft and related components.- Archer Aviation (ACHR) A $4.8 billion market cap company developing electric vertical takeoff and landing aircraft.
These four companies, with a combined market cap of just over 1% of Nvidia’s, make up more than 31% of ARKQ’s assets.
This diversification into smaller, more specialized firms sets ARKQ apart from other AI ETFs.
Reasonable Fees and High PotentialWhile the 0.75% expense ratio of ARKQ is higher than that of an S&P 500 index fund, it’s not significantly more than passive AI ETFs, which typically range from 0.47% to 0.68%.
For this slightly higher fee, you get the expertise of a respected tech investor hand-selecting the best AI opportunities.
This can be a worthwhile trade-off for investors looking for more tailored and potentially high-reward exposure to AI.
ConclusionThe Ark Autonomous Technology & Robotics ETF (ARKQ) is a compelling option for investors who want to get into AI but prefer not to just invest in the usual suspects.
The ETF’s active management and focus on smaller, innovative companies make it a unique and potentially rewarding choice.
If you’re interested in AI but want a different approach, ARKQ is definitely worth a closer look.
Frequently Asked Questions (FAQS):
Q: What is the Ark Autonomous Technology & Robotics ETF (ARKQ)?
A: The Ark Autonomous Technology & Robotics ETF (ARKQ) is an actively managed exchange-traded fund focused on AI and robotics. It is managed by Cathie Wood and aims to outperform benchmark AI indexes by investing in a diverse and specialized portfolio of 35 stocks.
Q: Why is ARKQ different from other AI ETFs?
A: ARKQ stands out because it is actively managed, has a more concentrated portfolio, and invests in lesser-known but promising AI firms. Most other AI ETFs are passively managed and heavily weighted towards well-known mega-cap tech stocks.
Q: What are some of the top holdings in ARKQ?
A: Some of the top holdings in ARKQ include Tesla (TSLA), Teradyne (TER), Kratos Defense & Security (KTOS), Rocket Lab USA (RKLB), and Archer Aviation (ACHR). These companies are involved in robotics, defense, spacecraft, and electric vertical takeoff and landing aircraft.
Q: What is the expense ratio of ARKQ?
A: The expense ratio of ARKQ is 0.75%, which is slightly higher than passive AI ETFs but still reasonable considering the active management and expertise of Cathie Wood.
Q: Is ARKQ a good choice for AI investors?
A: ARKQ is a good choice for investors who want exposure to AI but prefer a more diverse and specialized portfolio. It offers the potential for higher rewards by investing in innovative, smaller firms that are often overlooked by other AI ETFs.