ARK Investment Management unveils first 3D-printing ETF in the US

Jul 26th, 2016 | By | Category: Equities

New York-based investment adviser ARK Investment Management has launched the first US-listed exchange-traded fund to invest in companies operating in the 3D-printing ecosystem. The ARK 3D Printing ETF (Bats: PRNT) is the latest addition in the firm’s suite of ETFs targeting new disruptive technologies.

ARK Investment Management unveils first 3D printing ETF to list in the US

The ARK 3D Printing ETF invests in the equities of firms opearting within the 3D printing industry, including those involved in 3D printing hardware, computer-aided design & simulation software, service centres, scanning and measurement, and materials.

Those invested in the fund could benefit from the potential of 3D-printing to revolutionise manufacturing by shortening the time between design and production, reducing costs, and enabling greater design complexity, accuracy and customisation compared to traditional manufacturing methods.  While 3D-printing is currently a $5.2bn market, global management consultant McKinsey projects a growth of up to between $180bn and $490bn by 2025.

Catherine Wood, ARK Founder, Chief Executive Officer and Chief Investment Officer, said: “ARK’s research shows that the 3D-printing industry has one of the highest growth projections in the economy… As the technology evolves and costs continue to decline, the 3D-printing industry has the potential to steal market share from traditional manufacturing and transform every sector of the economy.  We are excited to bring this truly innovative fund to the market!”

The fund tracks the Total 3D-Printing Index, calculated by Solactive AG, which is composed of equity securities and depository receipts of exchange listed companies from the US, non-US developed markets and Taiwan that are engaged in 3D-printing related businesses. The index re-balances quarterly to maintain targeted weight exposures to several parts of the 3D-printing ecosystem. These factor weights at the time of re-balance are: 3D-printing hardware (50%), computer-aided design & simulation software (30%), service centres (13%), scanning and measurement (5%), and materials (2%).

As of 18 July 2016 the index has 40 constituents and significant exposure to the information technology (52.9%), industrials (32.0%), and health care (11.3%) sectors. The largest holdings are SLM Solutions (5.0%), Arcam AB (5.0%), 3D Systems Corp (5.0%) and Groupe Gorge (5.0%).

Investors should note that due to the infancy of the 3D-printing industry, there is a significant small-cap bias in the index. The index has a 45% allocation to small-cap firms, a 19% allocation to micro-cap firms and a 17% allocation to medium-cap firms. The weighted average market cap of the index is $8bn.

As of 1 July 2016 the fund’s index is up 13.1% year-to-date and 18.7% since its inception on 2 October 2016.

The fund has a total expense ratio (TER) of 0.66%.

While this is the first ETF to offer a pure-play exposure companies operating in the 3D-printing space, investors may receive similar exposure through ETFs investing in small-cap information technology firms. One such fund is the PowerShares S&P SmallCap Information Technology Portfolio (Nasdaq: PSCT). The fund tracks the S&P SmallCap 600 Capped Information Technology Index, which is up 6.5% year-to-date (26 July 2016). There are 98 holdings in the fund of which the largest exposure is Take-Two Interactive Software (3.4%). The fund’s TER is 0.29%.

While there are currently no European-listed ETFs with a pure-play offering to the 3D-printing industry, STOXX, a leading European index provider for the ETF industry launched an index covering the space three years ago, paving the way for future product development.

Other disruptive technologies targeted by ARK’s range of active and indexed ETFs include robotics, big data, machine learning, blockchain technology, cloud computing, energy storage, and DNA sequencing. Investors may wish to investigate the:
ARK Industrial Innovation ETF (NYSE:  ARKQ)
ARK Multi-Sector Genomic Revolution ETF (NYSE:  ARKG)
ARK Innovation ETF (NYSE:  ARKK)

This is the first ARK ETF to be listed on the Bats Exchange. Commenting on the arrival of a new issuer to the exchange, Laura Morrison, Bats Global Markets Senior Vice President, Global Head of Exchange-traded products, said: “We are excited to welcome an innovator like ARK as a new issuer on the Bats ETF Marketplace and we look forward to a successful partnership.”

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