Single Sector Fund

Nikko AM ARK Disruptive Innovation Fund

About the fund

This fund provides access to a global share portfolio that offers thematic exposure to disruptive innovation across a number of sectors and geographies.

Disruptive innovation is caused by the introduction of new technologically enabled products or services that permanently change an industry or economic sector by providing greater simplicity, accuracy, customisation and accessibility while driving down costs.

Risk Indicator (volatility)

1
2
3
4
5
6
7 Extremely high

Target Asset Allocation

Equities 100.00%

Commentary

As of 31 March 2022

Market Highlights

  • As investors feared high inflation and interest rates, consumer sentiment dropped below a level last seen during the depths of the coronavirus pandemic.
  • Innovation stocks remained volatile, swinging dramatically from declines during the first half of the month to a strong rally in the second half of the month.
  • In ARK’s view, the odds of a recession have increased meaningfully following Russia’s invasion of Ukraine, because oil prices––while inflationary in the short-term––have become an onerous, regressive tax on consumers. As a result, the US Federal Reserve could take a more dovish approach to future interest rate hikes. ARK cannot predict how this war will unfold and affect the markets but will monitor their portfolios for trading opportunities during what could be a volatile period.





 

The top contributors include Tesla (TSLA), Block (SQ), Signify Health (SGFY), Robinhood Markets (HOOD), and 2U (TWOU). TSLA rallied sharply in the latter half of the month. ARK believes the rise in oil prices will accelerate the shift toward electric vehicles. Tesla opened its fourth Gigafactory in Berlin, which should help the company meet growing demand. Shares of Block, a leader in digital wallets, appreciated after a series of positive analyst ratings and upgrades. Analysts increased their price target on a positive outlook for Cash App’s Instant Deposit feature, favorable adoption of Cash App amongst the teenage cohort, and continued global expansion of its Square ecosystem. In the fourth quarter earnings report, Signify Health beat revenue expectations and forecasted higher revenues than consensus estimates. Share of the company traded up during the month. Earlier in the month, shares of Robinhood traded up following a media report that the company is beta testing a Stock Loan Income Program that will enable customers to lend and earn on shares in their portfolio. Aligned with the company’s new and aggressive roadmap, the feature could boost both engagement and monetization of the brokerage’s securities lending business.

The top detractors include UiPath (PATH), Intellia Therapeutics (NTLA), Invitae (NVTA), Roku (ROKU), and Zoom Video Communications (ZM). Shares of UiPath fell more than 25% on the last day of March after the company reported fourth-quarter earnings that beat Wall Street estimates but cut forward guidance. ARK maintains high conviction in UiPath’s ability to integrate Robotic Process Automation (RPA) into many business processes across large enterprises around the world. Intellia released data demonstrating the efficacy of its gene editing therapy for the treatment of transthyretin-related hereditary amyloidosis (hATTR), including an average 93% reduction in the concentration of the mutant protein among the trial subjects––a significant improvement over existing hATTR therapies. The results were very positive but underwhelmed Wall Street, causing shares to trade down. Shares of Invitae, a developer of clinical-grade molecular diagnostics tests for a wide variety of applications, depreciated during the month on little company specific news. ARK maintains high conviction in Invitae’s platform. ROKU traded sideways during the month as some analysts lowered price targets after February’s earnings call, while positive news of the multi-year extension of its distribution agreement with Amazon led to a pop in performance. ZM also detracted from performance during the month.

 (source: ARK Investment Management LLC)

Performance

Nikko AM Investment Scheme
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Performance

at 31 March 2022
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 -2.05% -29.84% -40.15%
Appropriate Market Index (AMI)2 1.65% -10.04% 14.93%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: NASDAQ-100 Notional Net Total Return Index in NZD

5 year cumulative performance $10,000 invested

Top 10 Holdings

Security Name Percentage
Tesla Motors Inc 8.90%
Coinbase Global Inc 6.18%
Roku Inc 6.03%
Teladoc Health Inc 5.81%
Zoom Video Communications Inc 5.51%
Square Inc. Class A 5.25%
Unity Software Inc 4.58%
Exact Sciences Corporation 3.98%
Spotify Technology Sa 3.80%
Twilio Inc. Class A 3.79%

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