Interested in innovation & disruption but afraid of Cathie Wood’s ARKK? Take a look at DTEC
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For investors who are interested in innovation and disruptive technologies but are unsure about Cathie Woodâs ARK Innovation ETF (NYSEARCA:ARKK), a cheaper, more diverse fund exists. The ALPS Disruptive Technologies ETF (NYSEARCA:DTEC), which also focuses on innovative tech firms, has another leg up on its higher-profile rival: it has had a better performance in 2022.
DTEC is an equally weighted thematic ETF that looks to offer exposure to disruptive and innovative technologies inside of an ETF wrapper, similar to the goal of Cathie Wood's famous fund. DTEC concentrates on ten focus themes: healthcare innovation, IoT, clean energy & smart grid, cloud computing, data analytics, fintech, robotics & AI, cybersecurity, 3D printing, and mobile payments.
Cost: From a cost standpoint, DTEC comes forward with a 0.50% expense ratio, cheaper than ARKKâs 0.75% structure.
Holdings: DTEC offers exposure to 100 globally listed stocks while ARKK provides a more condensed 35 holdings. Furthermore, both DTEC and ARKK only have five stocks that overlap inside of each otherâs portfolios. The five overlaying stocks are Tesla (TSLA), Zoom Video Communications (ZM), Square (SQ), Stratasys (SSYS), and Materialise NV (MTLS).
Additionally, the five overlapping stocks represent nearly 25% of ARKK whereas the same grouping represents only 5.1% of DTEC.
Risk: Building off the portfolio construct, 12.23% of DTECâs assets fall inside the funds top 10 holdings, and ARKKâs top 10 holdings represent 59.77% of the exchange traded fund.
Performance: Both funds are down on the year as tech and growth have been punished as markets are headed towards a higher rate environment. With that being said, in 2022, DTEC is -20.2% and ARKK is -43.7%. Placing these returns into perspective, the Nasdaq (COMP.IND) is -19% YTD.
Meanwhile, over a one-year trading period, DTEC is down 18.6% and ARKK is -56.8%. Moreover, over a three-year period DTEC is +28.8% compared to ARKKâs +11%.
For a deeper dive on both funds, see Seeking Alphaâs complete fundamental and quantitative analysis on DTEC and ARKK.