Nikko AM ARK Global Disruptive Innovation provides access to a global equity portfolio that offers thematic exposure to disruptive innovation acorss a number of sectors, economies, geographies and companies.
The Fund underperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• UiPath shares appreciated after the company posted an earnings beat in the second quarter, delivering year-over-year revenue growth of 18.6%. UiPath Inc. provides an end-to-end automation platform that offers a range of robotic process automation solutions.
• Palantir shares saw gains after the company secured a contract with the U.S. Army to conduct research and development services in the area of artificial intelligence and machine learning. Earlier in the month, Palantir entered into an enterprise agreement with Babcock International Group to strengthen the latter’s digital defense capabilities through Palantir AIP.
• Roblox shares rallied on the back of a bullish investor pitch. Roblox provides a creator-first digital entertainment platform and a 3D engine, both of which allow third-party developers around the world to create games and experiences for users.
• Meta Platform shares rose after an analyst opened up a 90-day positive catalyst watch ahead of the Meta Connect event. The analyst predicted that more of Meta’s generative artificial intelligence plans, as well as next quarterly results could be revealed then.
• Verve Therapeutics shares saw gains after the company confirmed that data from a Phase 1 trial for its gene editing drug VERVE-101 would be presented at a medical event in November. VERVE-101 is an invivo gene editing therapy targeted at the cardiovascular disorder heterozygous familial hypercholesterolemia (HeFH) in the company’s ongoing heart-1 Phase 1b clinical trial
Key detractors from absolute performance:
• Block shares dipped after the company disclosed that the CEO of Square, Alyssa Henry, will depart on October 2nd. Jack Dorsey will step in to manage the seller ecosystem division.
• Roku shares slipped following an analyst downgrade which cited concerns over valuation and slowing revenue growth. Roku is a connected television (CTV) operating system and hardware provider that distributes various streaming platforms to millions of households globally.
• Gingko Bioworks shares along with other genome names were down as part of a greater market rotation out of the sector this month. Ginkgo Bioworks announced a partnership with Factorial Biotechnologies to develop a novel enzyme for use in Factorial’s single-cell next-generation sequencing library prep kit.
What is Nikko AM ARK Global Disruptive Innovt Nikko AM ARK Global Disruptive Innovt is an Managed Funds investment product that is benchmarked against Developed -World Index and sits inside the Foreign Equity - Large Fundamental Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Nikko AM ARK Global Disruptive Innovt has Assets Under Management of 199.22 M with a management fee of 1.35%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Nikko AM ARK Global Disruptive Innovt has returned 3.7% in the last month. The previous three years have returned -21.72% annualised and 34.6% each year since inception, which is when the Nikko AM ARK Global Disruptive Innovt first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Nikko AM ARK Global Disruptive Innovt first started, the Sharpe ratio is NA with an annualised volatility of 34.6%. The maximum drawdown of the investment product in the last 12 months is -15.47% and -73.55% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Nikko AM ARK Global Disruptive Innovt has a 12-month excess return when compared to the Foreign Equity - Large Fundamental Index of -0.39% and -7.98% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Nikko AM ARK Global Disruptive Innovt has produced Alpha over the Foreign Equity - Large Fundamental Index of NA% in the last 12 months and NA% since inception.
What are similar investment products? For a full list of investment products in the Foreign Equity - Large Fundamental Index category, you can click here for the Peer Investment Report.
What level of diversification will Nikko AM ARK Global Disruptive Innovt provide? Nikko AM ARK Global Disruptive Innovt has a correlation coefficient of 0.65 and a beta of 2.55 when compared to the Foreign Equity - Large Fundamental Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Nikko AM ARK Global Disruptive Innovt and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Nikko AM ARK Global Disruptive Innovt with the Developed -World Index? For a full quantitative report on Nikko AM ARK Global Disruptive Innovt compared to the Developed -World Index, you can click here.
Can I sort and compare the Nikko AM ARK Global Disruptive Innovt to do my own analysis? To sort and compare the Nikko AM ARK Global Disruptive Innovt financial metrics, please refer to the table above.
Has the Nikko AM ARK Global Disruptive Innovt been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Performance Commentary - August 31, 2023 The Fund underperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• Archer Aviation shares soared after the company reported its second quarter earnings, reiterated plans to begin commercialisation of its flying taxis in 2025. Archer also shored up its balance sheet with USD 215 million investment from key partners like Stellantis, Boeing, and United, which ARK was able to participate in. Archer Aviation is an aerospace company aiming to revolutionise mobility with its electric vertical takeoff and landing (eVTOL) products and services.
• Nvidia delivered on stronger than expected second quarter results and guidance. Later in the month, Google announced that its A3 supercomputer virtual machines powered by Nvidia’s H100 Tensor Core GPUs should be available next month.
• Spotify shares appreciated on little company-specific news. ARK believes Spotify will continue to grow its share in the music stream space, in addition to building out its podcasting capabilities.
• Intuit shares rallied after delivering a fourth quarter earnings beat, delivering stronger-than-expected top and bottom lines. However, the stock later retreated after delivering soft guidance for its fiscal first quarter. Ark observe that Intuit has made capital investments into AI, which Ark believe will drive a two-sided financial management ecosystem for both consumers and businesses.
• MercadoLibre posted strong earnings for the second quarter and cited Brazil and Mexico as the major contributors to profit growth with solid operational KPIs, strong monetization, and cost efficiency. Later in the month, MercadoLibre appointed a new CFO.
Key detractors from absolute performance:
• Shares of Block declined on relatively little company specific news. ARK believes Block is uniquely positioned to combine its seller and consumer ecosystems in the future, unlocking potential value unobtainable by other fintech firms.
• Shares of Roku declined after an investment firm downgraded the stock from “Buy” to “Neutral”, stating that any coming reacceleration in revenue in 2024 was “priced in”. Roku is a connected television (CTV) operating system and hardware provider that distributes various streaming platforms to millions of households globally.
• Shares of Coinbase traded down following the announcement of the company’s third-quarter results, which included a smaller loss than expected and stronger than expected revenue.
Performance Commentary - July 31, 2023 The Fund outperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• Roku rallied after the company released its secondquarter results. Roku’s platform revenue grew 11% year-over-year, as active accounts increased 16% to 73.5 million and streaming hours jumped 21%. Roku’s second-quarter results reaffirm ARK’s conviction in its potential to revolutionize digital streaming and displace linear TV incumbents. Moreover, the company also announced a partnership with Shopify to bring shoppable ads to its users earlier in the month.
• Coinbase and other crypto-related stocks like Block traded up after the company relisted Ripple’s XRP after a landmark ruling by a U.S. District Court, which states that the coin is not a security in terms of sales to the general public. ARK maintains conviction in Coinbase’s leadership across the crypto ecosystem.
• DraftKings appreciated after an analyst upgraded the stock, noting a materially faster ramp of new state openings and higher online betting from parlays and game mix.
• Gingko Bioworks shares rallied after the U.S. Intelligence Community awarded it a contract to develop a biosensor that can track the cellular histories of the microbial genome. As part of the collaboration, Gingko also intends to develop processes to retrieve this data so that the microbe’s past exposures can be analyzed.
Key detractors from absolute performance:
• Roblox traded down following relatively little company specific news. Roblox provides a creatorfirst digital entertainment platform and a 3D engine, both of which allow third-party developers around the world to create games and experiences for users.
• Materialise shares fell following a earnings miss. Second quarter earnings disappointed, with GAAP EPS of -$0.01, down 150% since reporting $0.02 per share in the same period a year ago, despite yearover-year revenue growth of 11.6%. The company maintained its previous revenue and adjusted EBITDA guidance for the rest of 2023. Materialise is a company in the 3D printing / additive manufacturing sector.
• 3D Systems continued to trade down after it announced its intention to acquire Stratasys last month. The company is targeting Aug 4th for the completion of talks with Stratasys. ARK continues to monitor these developments closely.
• Beam Therapeutics traded down on relatively little company-specific news. Beam Therapeutics is a clinical stage pharmaceutical company developing gene editing therapies that employ a cutting-edge, next generation base-editing technique, which could be beneficial for allowing less off-target edits.
• Pacific Biosciences of California traded down on relatively little company-specific news. ARK believes that PacBio, which is already the dominant supplier of long-read sequencing (“LRS”) instruments and consumables, is well positioned to capitalise on what ARK predicts will be a continued growth trend in the demand for LRS.
Performance Commentary - June 30, 2023 The Fund outperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• Tesla shares rallied after the company opened its Supercharger network to General Motors and Ford. Later in the month, SAE International, an automotive industry body that sets and reviews engineering standards, announced that it would standardize Tesla’s North American Charging Standard connector.
• Unity shares soared after the company unveiled its artificial intelligence (AI) marketplace. The stock was also upgraded to “outperform” by an analyst, citing a meaningful mobile cross-sell opportunity, cost synergies, and an increasing total addressable market.
Key detractors from absolute performance:
• CRISPR Therapeutics detracted from performance this month. CRISPR and Vertex Pharmaceuticals announced that their Biologics License Applications for gene-edited blood disorder candidate exa-cel has been accepted by the FDA. The FDA has issued a Priority Review for its BLA in severe sickle cell disease with a target action date on December 8, 2023, and a standard review for that in transfusiondependent beta-thalassemia with a target action date on March 30, 2024.
• Twilio depreciated on little company specific news. The company agreed to sell its Value First business and allocate its resources to other strategic priorities. Twilio is a leading provider of customer-focused IP and programmatic communications with developerfriendly APIs, global connectivity, and industryleading reliability.
Performance Commentary - May 31, 2023 The Fund outperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• Tesla shares rallied following a positive response to the company’s annual shareholder meeting, where co-founder J.B. Straubel was elected to the board of directors. The company reaffirmed its promise to deliver its first Cybertrucks this year, and announced that the company will begin advertising.
• CRISPR Therapeutics shares rallied on the back of strong first quarter results. The Swiss biotech reported $100 million in revenue from its collaboration with Vertex Pharmaceuticals ahead of a potential FDA review for the gene-editing therapy exa-cel.
Key detractors from absolute performance:
• Shares of Teladoc traded down on relatively little company-specific news. ARK believes Teladoc’s focus on data science at scale across multiple care categories (e.g. acute, ambulatory, and chronic settings) will offer the broadest, most entrenched care package in the virtual healthcare market.
• 2U missed its first quarter earnings and faces some regulatory uncertainty, which caused the stock to depreciate. In ARK’s view, 2U’s cloud infrastructure offers the best online education platform in the US and perhaps the world. ARK believes that its acquisition of edX, a massive online course provider created by Harvard and MIT, will be game-changing. 2U’s ability to help institutions lower costs should put it in a good light as the US reviews the regulatory framework around education.
Performance Commentary - April 30, 2023 The Fund underperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• DraftKings shares appreciated on the back of Wall Street analysts becoming more optimistic about the company’s first quarter earnings. Given its plans to launch in Puerto Rico, ARK believes DraftKings will deliver another year of rapid growth. DraftKings is a sports betting, iGaming, and fantasy sports platform.
• Shares of CRISPR Therapeutics and other geneediting names, like Intellia Therapeutics, rallied as Wall Street analysts issued bullish views, noting that the sector had been disproportionately punished. Moreover, the company, alongside Vertex Pharmaceuticals, also completed a rolling submission of a Biologics License Application to the FDA for exagamglogene autotemcel (exa-cel) for sickle cell disease and transfusion-dependent beta-thalassemia.
• Schrodinger shares rallied on the back of little company-specific news. Schrodinger specializes in developing computational tools and software for drug discovery and materials science.
• Teladoc shares traded up after it announced the launch of its provider-based care for weight management and prediabetes for the third quarter. Moreover, the company beat its first quarter earnings, citing a 11% YoY revenue growth.
Performance Commentary - February 28, 2023 The Fund outperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• Tesla shares saw gains on signs that recent price cuts are spurring demand for its Model Y. The stock also rallied after Ford announced that it halted production and shipments of its electric F-150 Lightning pickup due to a battery issue. Lastly, the Mexico President held a call with Tesla in anticipation of the announcement of a new plant near Monterrey. This will be one of eight new Gigafactories as part of the company’s goal to produce 20 million vehicles a year by the end of 2030.
• Roku shares rallied after the company delivered a fourth quarter earnings beat, topping Wall Street expectations. During the quarter active accounts jumped 16% year over year, and streaming hours rose 23% year over year. The company also reaffirmed its commitment to deliver positive adjusted EBITDA in 2024 through a combination of operating expense control and revenue growth.
Key detractors from absolute performance:
• Shopify traded down after the company reported fourthquarter earnings. Gross merchandise volume (GMV) across Shopify merchants and total revenue grew 13% and 25%, respectively, on a year-over-year basis. For the first quarter, management expects total revenue growth to decelerate to the high teens. That said, Shopify has developed several business lines that could reaccelerate growth—Shopify Fulfilment Network and Shopify Components—as could the continued adoption of Shop Pay and a cyclical rebound in ecommerce demand.
• Unity Software traded down after the company’s fourth quarter report, which included recently acquired ironSource, revenue growth was 43% year-over-year and, according to management, will accelerate in the range of 47% to 50% in the first quarter and 47% to 58% for the year, both growth rates were lower than consensus expectations. Management explained that the assumptions behind those forecasts are conservative, including no recovery in the mobile gaming market even though it seems to have stabilized. Meanwhile, strong execution has increased non-gaming to 30% of Create revenue. ARK’s conviction remains high that Unity will maintain leadership as the 2D and 3D asset engine and monetization platform of choice for developers across many verticals.
Performance Commentary - January 31, 2023 The Fund outperformed broad based global equities during the month (net).
Key contributors to absolute performance:
• Roku shares rallied after the company announced it surpassed 70 million active accounts globally, marking a 16% YoY growth. Roku also announced plans to release its own line of TVs this year. ARK believes Roku is a dominant player in the connected TV space, and it continues to operate the most successful independent TV OS in the U.S.
• Tesla rallied on the back of strong fourth quarter results, where Elon Musk told investors that Tesla had the ability to produce up to 2 million vehicles this year, assuming no hiccups. On that note, the company confirmed that the Cybertruck is on track to start production later in the year in its Austin, Texas factory. The company also provided an optimistic outlook on profits, citing that hardware-related profits are expected to be accompanied by an acceleration of software-related profits. This aligns with ARK’s thesis on autonomous driving. Lastly, the company is slated to share details on its next generation vehicle, which ARK believes could be a purpose-built robotaxi, during its Investor Day in March.
Key detractors from absolute performance:
• Cerus traded down after the company reported earnings and described 2023 as a “bridge year” in which the outlook remains unclear. In ARK’s view, foreign exchange (FX) pressures and inventory issues in the international blood industry are weighing on the short-term outlook. Cerus is a biomedical products company supplying hardware and consumables under its flagship blood transfusion safety brand, INTERCEPT.
• Prime Medicine traded down on relatively little company specific news. Prime Medicine is a biotechnology company committed to delivering a new class of differentiated, onetime, curative genetic therapies to address the widest spectrum of diseases.
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