BMO ARK Genomic Revolution Fund ETF Series - ARKG Sales Aid
DNA Sequencing is Restructuring Health CareJul. 31, 2023
- The global economy is undergoing one of the largest technological transformations in history1 displacing industry incumbents and creating new leaders, enablers, and beneficiaries of disruptive innovation.
- ARK focuses solely on offering investment solutions to capture disruptive innovation that span market capitalization and sectors with low overlap to broad-market indices.
- Invests in ARK’s investment theme of genomic revolution, including gene sequencing, gene editing, and living therapies, which are changing the way diseases are treated and enhancing quality of life.
|Invest In The Future Today|
Innovation could displace industry incumbents, increase efficiencies, and gain majority market share. This technologically enabled change offers long-term opportunities for companies and investors alike.
|Take Advantage Of Market Inefficiencies|
Market inefficiencies, such as short-term time horizons, siloed investment styles, closed off research mentality, or backwards looking indices may cause investors to miss out on future growth driven by disruptive innovation.
|Make The World More Innovative|
Good innovation investing should focus on technologies and companies that are likely to have a positive impact on our society, and the world’s ability to create further innovations.
Reasons to Consider Utilizing ARKG - BMO ARK Genomic Revolution Fund ETF Series
|Cost Effective and Ease-of-Access||Provides a lower cost option with true active management in an ETF structure without the need for foreign currency exchange or US Estate tax considerations as it trades on the Toronto Stock Exchange.|
|Exposure to Specific|
|Invests in companies across sectors with exposure to DNA sequencing, including gene therapy bio-informatics, bioinspired computing, molecular medicine and pharmaceutical innovations with the potential for long-term growth|
|Growth Potential||Aims to capture long-term growth with low correlation of relative returns to traditional growth strategies and negative correlation to value strategies.|
|Tool For Diversification||Adds diversification to portfolios with negative correlation to traditional value strategies and low correlation to several core asset classes and traditional growth strategies.2|
|Grounded In Research||Combines top-down and bottom-up research in its portfolio management to identify innovative companies and convergence across markets.|
ARK aims for negative
correlation of relative returns to
traditional value strategies…
…and low correlation of relative
returns to traditional growth
The ARK Difference
ARK Investment Management LLC (ARK) was founded in January 2014 by Catherine (Cathie) Wood and has $25.1 billion3 in assets under management. It focuses solely on offering investment solutions to capture disruptive innovation in the public markets. As the Founder, CEO and CIO of ARK, Cathie appears regularly on CNBC, Bloomberg, and Fox Business, among other broadcast news, and has been featured and quoted in The Wall Street Journal, Forbes, Fortune, Barron’s, New York Times, and numerous other media outlets. As a thought leader for investing in disruptive innovation, Cathie has been widely recognized for her vision and impact in the financial industry.
“Innovation should displace industry incumbents, increase efficiencies, and gain majority market share. More Importantly, disruptive innovation impact and concerns all of our lives.”
Catherine Wood, Founder, CEO and CIO of ARK Investment Management LLC
|DNA Sequencing is Restructuring Health Care|
DNA sequencing is changing the way biological information is collected, processed, and applied. In doing so, it is increasing precision, restructuring health care, agriculture, pharmaceuticals, and enhancing quality of life. Given potential cures for diseases, the share of research and development (R&D) funding for gene therapy innovations should continue to rise. By 2026, the share of total R&D spending devoted to gene editing and therapy companies could grow from 3% to 17% and the market capitalization could scale from roughly $130 billion to $1.1 trillion by 2026.4
Investment Process: Combining Top-Down & Bottom-Up Research
Case Study: Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)5
Gene editing breakthroughs are creating more effective therapies at a faster rate than historically has been the case. Compared to Zinc Finger nucleases (ZFNs), which moved from discovery to the first human dose in roughly eight years, CRISPR took less than half the time, three years, and can address 48% of known diseases, nearly twice ZFNs’ 28%. Prime and Base editing, CRISPR derivatives, address even more diseases, 79% and 59% respectively.
(zinc finger nucleases)
(transcription activator-like effector nucleases)
(Clustered Regularly Interspaced Short Palindromic Repeats)
Two proteins around the target
Two proteins around the target
Guide RNA and Cas protein
Use engineered ZF repeat domains to target specific sites in host DNA and induce double stranded breaks (DSBs) with the nuclease.
Targets host DNA using unique modular proteins and induce DSBs with the nuclease.
Uses a protein-RNA complex to guide its nuclease to the target site.
ETF Series at a Glance
|Invests in||Actively managed equity strategy that invests in companies that represent ARK’s investment theme of|
genomic revolution. They are focused on extending and enhancing the quality of human and other life by incorporating technological and scientific developments and advancements in genomics into their business.
|Investment process||Top-down and bottom-up; benchmark agnostic portfolio construction|
|Typical holdings||40-60 positions|
|Weighted avg. market cap||$37 billion|
|Benchmark Index||MSCI ACWI Health Care Index (C$)|
TOP 10 HOLDINGS
- Exact Sciences Corp
- Schrodinger Inc/United States
- Pacific Biosciences of California Inc
- Ionis Pharmaceuticals Inc
- Teladoc Health Inc
- Ginkgo Bioworks Holdings Inc
- Crispr Therapeutics AG
- Accolade Inc
- Intellia Therapeutics Inc
- Adaptive Biotechnologies Corp
Target allocation of the Fund’s Top 10 Holdings, Sector and Region Breakdown and Weighted avg. market cap as of June 30, 2023. For illustrative purposes only and may change due to the Fund’s ongoing portfolio transactions without notice.
ETF Ticker: ARKG | MER*: 0.85%
*Also available in Mutual Fund Series. Management Expense Ratio (MER) is estimated as ETF is less than one year old.
How to use BMO ARK Genomic Revolution Fund ETF Series in Building A Portfolio
- Consider adding to your existing growth portfolio to add diversification to a unique theme
- A small allocation can lead to greater returns vs a traditional growth portfolio
- Use as a long term position to a series of sectors that are ongoing rapid innovation
Examples to consider: The first example is using BMO Growth ETF (ZGRO) without ARK Genomic Revolution Fund ETF. The second example shows the inclusion of ARK Genomic Revolution Fund ETF (NYSE: ARKG).
BMO Growth ETF - ZGRO
|Return Since Common Inception||8.42%|
|3 Year Standard Deviation||10.86%|
|5 Year Standard Deviation||11.64%|
|3 Year Sharpe Ratio||0.43|
|5 Year Sharpe Ratio||0.33|
BMO Growth ETF with 10% Allocation to ARKG*
Hypothetical Data based on the past performance of NYSE: ARKG - For Illustration Purposes Only.
|Return Since Common Inception||8.80%|
|3 Year Standard Deviation||12.09%|
|5 Year Standard Deviation||12.93%|
|3 Year Sharpe Ratio||0.31|
|5 Year Sharpe Ratio||0.34|
* The returns presented are not for a client portfolio but are for illustration purposes only. The scenario presented above uses the existing US ETF – ARK Genomic Revolution ETF (ARKG) as a substitute for BMO ARK Genomic Revolution Fund - ETF Series (ARKG) because the BMO Fund is new and has no performance history. The U.S. version has the same mandate and portfolio manager as the newly launched BMO ETF Series. NYSE: ARKG has different fees than the BMO Fund. BMO Growth ETF is prohibited from investing in an NYSE: ARKG because it is an actively managed U.S. ETF. All return data is in CAD $ as of July 31, 2023. Common inception: October 31, 2014. Source: Morningstar Direct August 1, 2023.
1 Source: ARK Investment Management LLC.
2 Traditional value investing is an investment strategy where stocks are selected that trade for less than their intrinsic values. Traditional growth investing is an investment strategy that focuses on stocks, whose earnings are expected to grow at an above-average rate compared to its industry or the overall market. Correlation is the degree to which two strategies move in relation to each other.
3 AUM as of September 30, 2022.
4 Source: ARK Investment Management LLC, 2021.
5 Source: ARK Investment Management LLC, 2021.
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