ARK（木头姐姐）：2022Q2ARK ETF基金投资分析

Q2∙2022

QUARTERLYREPORT

ActiveETFs

ARKQ

IndexETFs

PRNT

IZRL

CTRU

ARKExchangeTradedFunds(ETFs)

UpdateasofJune30,2022

ARKW

ARKG

ARKK

ARKF

ARKX

ARKInvestmentManagementLLC

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ARKINNOVATIONETFs–SecondQuarter2022

InvestorsshouldcarefullyconsidertheinvestmentobjectivesandrisksaswellaschargesandexpensesofanARKETFbeforeinvesting.ThisandotherinformationarecontainedintheARKETFs’prospectuses,whichmaybeobtainedbyvisiting.Theprospectusshouldbereadcarefullybeforeinvesting.AninvestmentinanARKETFissubjecttorisksandyoucanlosemoneyonyourinvestmentinanARKETF.TherecanbenoassurancethattheARKETFswillachievetheirinvestmentobjectives.TheARKETFs’portfoliosaremorevolatilethanbroadmarketaverages.AdditionalrisksofinvestinginARKETFsincludeequity,market,managementandnon-diversificationrisks,aswellasfluctuationsinmarketvalueandNAV.TheETF’sportfolioismorevolatilethanbroadmarketaverages.SharesofARKETFsareboughtandsoldatmarketprice(notNAV)andarenotindividuallyredeemedfromtheETF.ETFsharesmayonlyberedeemeddirectlywiththeETFatNAVbyAuthorizedParticipants,inverylargecreationunits.TherecanbenoguaranteethatanactivetradingmarketforETFshareswilldeveloporbemaintained,orthattheirlistingwillcontinueorremainunchanged.BuyingorsellingETFsharesonanexchangemayrequirethepaymentofbrokeragecommissionsandfrequenttradingmayincurbrokeragecoststhatdetractsignificantlyfrominvestmentreturns.

TheprincipalrisksofinvestingintheARKETFsinclude:EquitySecuritiesRisk.ThevalueoftheequitysecuritiestheARKETFholdsmayfallduetogeneralmarketandeconomicconditions.ForeignSecuritiesRisk.InvestmentsinthesecuritiesofforeignissuersinvolverisksbeyondthoseassociatedwithinvestmentsinU.S.securities.DisruptiveInnovationRisk.CompaniesthatARKbelievesarecapitalizingondisruptiveinnovationanddevelopingtechnologiestodisplaceoldertechnologiesorcreatenewmarketsmaynotinfactdoso.Companiesthatinitiallydevelopanoveltechnologymaynotbeabletocapitalizeonthetechnology.Companiesthatdevelopdisruptivetechnologiesmayfacepoliticalorlegalattacksfromcompetitors,industrygroupsorlocalandnationalgovernments.Thesecompaniesmayalsobeexposedtorisksapplicabletosectorsotherthanthedisruptiveinnovationthemeforwhichtheyarechosen,andthesecuritiesissuedbythesecompaniesmayunderperformthesecuritiesofothercompaniesthatareprimarilyfocusedonaparticulartheme.SpecialPurposeAcquisitionCompanies(SPAC)Risk.ASPACisapubliclytradedcompanythatraisesinvestmentcapitalforthepurposeofacquiringormergingwithanexistingcompany.InvestmentsinSPACsandsimilarentitiesaresubjecttoavarietyofrisksbeyondthoseassociatedwithotherequitysecurities.BecauseSPACsandsimilarentitiesdonothaveanyoperatinghistoryorongoingbusinessotherthanseekingacquisitions,thevalueoftheirsecuritiesisparticularlydependentontheabilityoftheSPAC’smanagementtoidentifyamergertargetandcompleteanacquisition.TheARKETFsalsohavespecificrisks,whicharedescribedbelow.MoredetailedinformationregardingtheseriskscanbefoundintheARKETFs’prospectuses.

TheprincipalrisksofinvestingintheARKKinclude:HealthCareSectorRisk.Thehealthcaresectormaybeadverselyaffectedbygovernmentregulationsandgovernmenthealthcareprograms.CommunicationsSectorRisk.Companiesisthissectormaybeadverselyaffectedbypotentialobsolescenceofproducts/services,pricingcompetition,researchanddevelopmentcosts,substantialcapitalrequirementsandgovernmentregulation.InformationTechnologySectorRisk.Informationtechnologycompaniesfaceintensecompetition,bothdomesticallyandinternationally,whichmayhaveanadverseeffectonprofitmargins.

TheprincipalrisksofinvestingintheARKQinclude:IndustrialsSectorRisk.Companiesintheindustrialssectormaybeadverselyaffectedbychangesingovernmentregulation,worldeventsandeconomicconditions.Inaddition,companiesintheindustrialssectormaybeadverselyaffectedbyenvironmentaldamages,productliabilityclaimsandexchangerates.ConsumerDiscretionaryRisk.Companiesinthissectormaybeadverselyimpactedbychangesindomestic/internationaleconomies,exchange/interestrates,socialtrendsandconsumerpreferences.InformationTechnologySectorRisk.Informationtechnologycompaniesfaceintensecompetition,bothdomesticallyandinternationally,whichmayhaveanadverseeffectonprofitmargins.

TheprincipalrisksofinvestingintheARKFinclude:FinancialTechnologyRisk.Companiesthataredevelopingfinancialtechnologiesthatseektodisruptordisplaceestablishedfinancialinstitutionsgenerallyfacecompetitionfrommuchlargerandmoreestablishedfirms.FintechInnovationCompaniesmaynotbeabletocapitalizeontheirdisruptivetechnologiesiftheyfacepoliticaland/orlegalattacksfromcompetitors,industrygroupsorlocalandnationalgovernments.Blockchaintechnologyisnewandmanyofitsusesmaybeuntested.BlockchainandDigitalcommoditiesandtheirassociatedplatformsarelargelyunregulated,andtheregulatoryenvironmentisrapidlyevolving.Asaresult,companiesengagedinsuchblockchainactivitiesmaybeexposedtoadverseregulatoryaction,fraudulentactivityorevenfailure.

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ARKINNOVATIONETFs–SecondQuarter2022

TheprincipalrisksofinvestingintheARKWinclude:InformationTechnologySectorRisk.Informationtechnologycompaniesfaceintensecompetition,bothdomesticallyandinternationally,whichmayhaveanadverseeffectonprofitmargins.CryptocurrencyRisk.Cryptocurrency(notably,bitcoin),oftenreferredtoas‘‘virtualcurrency’’or‘‘digitalcurrency,’’operatesasadecentralized,peer-to-peerfinancialexchangeandvaluestoragethatisusedlikemoney.TheFundmayhaveexposuretobitcoin,acryptocurrency,indirectlythroughaninvestmentintheBitcoinInvestmentTrust(‘‘GBTC’’),aprivatelyoffered,open-endinvestmentvehicle.Cryptocurrencyoperateswithoutcentralauthorityorbanksandisnotbackedbyanygovernment.Evenindirectly,cryptocurrenciesmayexperienceveryhighvolatilityandrelatedinvestmentvehicleslikeGBTCmaybeaffectedbysuchvolatility.Asaresultofholdingcryptocurrency,theFundmayalsotradeatasignificantpremiumtoNAV.Cryptocurrencyisalsonotlegaltender.Federal,stateorforeigngovernmentsmayrestricttheuseandexchangeofcryptocurrency,andregulationintheU.S.isstilldeveloping.Cryptocurrencyexchangesmaystopoperatingorpermanentlyshutdownduetofraud,technicalglitches,hackersormalware.ManysignificantaspectsoftheU.S.federalincometaxtreatmentofinvestmentsinbitcoinareuncertainandaninvestmentinbitcoinmayproduceincomethatisnottreatedasqualifyingincomeforpurposesoftheincometestapplicabletoregulatedinvestmentcompanies,suchastheFund.GBTCisexpectedtobetreatedasagrantortrustforU.S.federalincometaxpurposes,andthereforeaninvestmentbytheFundinGBTCwillgenerallybetreatedasadirectinvestmentinbitcoinforsuchpurposes.See‘‘Taxes’’intheFund’sSAIformoreinformation.

TheprincipalrisksofinvestingintheARKGinclude:HealthCareSectorRisk.Thehealthcaresectormaybeadverselyaffectedbygovernmentregulationsandgovernmenthealthcareprograms,restrictionsongovernmentreimbursementsformedicalexpenses,increasesordecreasesinthecostofmedicalproductsandservicesandproductliabilityclaims,amongotherfactors.Manyhealthcarecompaniesareheavilydependentonpatentprotectionandintellectualpropertyrightsandtheexpirationofapatentmayadverselyaffecttheirprofitability.BiotechnologyCompanyRisk.Abiotechnologycompany’svaluationcanoftenbebasedlargelyonthepotentialoractualperformanceofalimitednumberofproductsandcanaccordinglybegreatlyaffectedifoneofitsproductsproves,amongotherthings,unsafe,ineffectiveorunprofitable.Biotechnologycompaniesaresubjecttoregulationby,andtherestrictionsof,theU.S.FoodandDrugAdministration,theU.S.EnvironmentalProtectionAgency,stateandlocalgovernments,andforeignregulatoryauthorities.PharmaceuticalCompanyRisk.Companiesinthepharmaceuticalindustrycanbesignificantlyaffectedby,amongotherthings,governmentapprovalofproductsandservices,governmentregulationandreimbursementrates,productliabilityclaims,patentexpirationsandprotectionandintensecompetition.

TheprincipalrisksofinvestingintheARKXinclude:IndustrialsSectorRisk.Companiesintheindustrialssectormaybeadverselyaffectedbychangesingovernmentregulation,worldeventsandeconomicconditions.Inaddition,companiesintheindustrialssectormaybeadverselyaffectedbyenvironmentaldamages,productliabilityclaimsandexchangerates.InformationTechnologySectorRisk.Informationtechnologycompaniesfaceintensecompetition,havelimitedproductlines,markets,financialresourcesorpersonnel,facerapidproductobsolescence,areheavilydependentonintellectualpropertyandthelossofpatent,copyrightandtrademarkprotectionsmayadverselyaffecttheprofitabilityofthesecompanies.AerospaceandDefenseCompanyRisk.CompaniesintheaerospaceanddefenseindustryrelytoalargeextentonU.S.(andother)Governmentdemandfortheirproductsandservicesandmaybesignificantlyaffectedbychangesingovernmentregulationsandspending,aswellaseconomicconditions,industryconsolidationandotherdisasters.RisksspecifictoIndexETFs(IZRL,PRNT,CTRU)includeIndexTrackingRisk.ThereturnsoftheETFmaynotmatchthereturnsoftheunderlyingindexthattheETFisdesignedtotrack.RisksspecifictoIZRLincludeIsraelRisk.Israelicompaniesmaybeadverselyaffectedbychangesinpoliticalclimate,governmentregulation,worldevents,economicconditions,andexchangerates.TheuniquecharacteristicsofsecuritiesofIsraelicompaniesandtheIsraelstockmarketmayhaveanegativeimpactontheETF.AdditionalrisksofinvestinginARKETFsincludemarket,managementandnon-diversificationrisks,aswellasfluctuationsinmarketvalueNAV.ETFsharesmayonlyberedeemeddirectlywiththeETFatNAVbyAuthorizedParticipants,inverylargecreationunits.TherecanbenoguaranteethatanactivetradingmarketforETFshareswilldeveloporbemaintained,orthattheirlistingwillcontinueorremainunchanged.BuyingorsellingETFsharesonanexchangemayrequirethepaymentofbrokeragecommissionsandfrequenttradingmayincurbrokeragecoststhatdetractsignificantlyfrominvestmentreturns.

ARKINNOVATIONETFs–SecondQuarter2022

QuarterlyCommentary

CatherineD.Wood,ARKChiefInvestmentOfficer

Broad-basedglobalequityindexes1depreciatedsignificantlyduringthesecondquarterasglobalrecessionfearsboiledtoatippingpoint,damagingconsumer,business,andinvestorconfidence.Innovationstocks,particularlythoseoutsidethebroad-basedindexes,wereparticularlyhardhitduringthefirsthalfofthequarterbeforesuccumbingtosignificantweeklypriceswingsduringthesecondhalf.

BetweenMarch2021andtheendofthesecondquarter2022,theyieldcurve2flattenedfrom159basispointsto6basispointswithbriefinversions,suggestingthatbothrealgrowthandinflationcouldsurpriseonthelowsideofexpectations.AsmeasuredbytheUniversityofMichigan,USconsumersentiment3plummetedto50––ahistoriclowthatundercutlevelsseenduringthecoronaviruspandemic,the2008-2009GlobalFinancialCrisis,andtheearly1980swhentheeconomysufferedtworecessionsandinflationandinterestrateshitdoubledigits.

TheoddsofaglobalrecessionincreasedmeaningfullyinMarchafterRussia’sinvasionofUkraine.Althoughinflationaryintheshort-term,theriseinoilpriceshasimposedahighlyregressivetaxonconsumers.DependentonRussiaforenergy,Europeseemstohaveenteredrecession.Chinaseemstohaveerredonthesideofrestraintandistryingtoresuscitategrowthand,intheUS,theAtlantaFed’sGDPNowisforecastingasecondsequentialdeclineinrealGDP––arecession—intheUS.

Inourview,long-terminflationfearshavebeenmisplacedbecausethegoldpriceistradingatthelowendofatwo-yearrange,copperpriceshavebrokendownfromaone-yearrange,andglobalinventorieshavepiledup.Meanwhile,theUSconsumersavingsratehasdroppedto5.4%4,roughly250basispointsbelowitslevelpriortothecoronaviruscrisiswhich,whencoupledwithhistoricallylowconsumersentiment,suggestslessroom–ifany-forgrowthinconsumption.Duringthepastyear,inanoverreactiontobottlenecksinthesupplyofgoodsandservices,businessesandconsumersappeartohaveaccumulated“inventories”.Intheirfirst-quarterearningsreleases,WalmartandTarget––twocompaniesthathaveperfectedsupplychain

1AsmeasuredbytheS&P500andMSCIWorld.

2Asmeasuredbythedifferencebetweenyieldsonthe10-yearTreasurybondandthe2-yearTreasurynote.

3AsofJune2022.

4AsofMay2022.

ARKInvest|etfs@|

management––reportedthatinventoriesincreased32%and43%innominaltermsonayear-over-yearbasis,whichlikelytranslatedinto20-25%and30-35%inrealterms,respectively.Meanwhile,forthefirsttimesinceitslaunchinOctober2020,thepriceofNvidia’sRTX3070GPUhasdroppedmorethan65%totheMSRP(manufacturer’ssuggestedresaleprice),anditwasreportedthatcustomersofTaiwanSemiconductorarepullingsemiconductorordersinresponsetoexcessinventory.Inourview,inanattempttosatisfystrongerthanexpecteddemand,companiesdouble-andtriple-orderedgoods,creatinganinventoryglutthatwillunwindascompanieslowerpricestocleartheirshelves.Unsurprisingly,theInstituteforSupplyManagement(ISM)reportedthefirstcontractioninneworderssincemid-2020.5ThecombinationofgeopoliticalforcesandinventoryhoardinghaspushedUSconsumerpriceinflation––alaggingindicatorofinflation––to9.1%5onayear-over-yearbasis,aratethatwebelievedeflationaryforces––good,bad,andcyclical––arebeginningtounwind.

Excessiveinventorylevelsarenottheonlycyclicalsignalflashingdeflation.Creditdefaultswaps(CDS)––insurancepoliciesagainstbankruptcies––havedoubledthisyear6,surpassingtheirpeaksduringthemarketroutinlate2018,andareheadingbacktowardCOVIDcrisislevels.TheUSDollarhasstrengthened9.4%thisyearandmorethan14.0%fromitslowslastyear,placingasignificantburdenonemergingandothermarketswithdollar-denominateddebt.Pricedindollars,commoditiesalsohavebeensuffering.Aftersoaringtoapeakofroughly$2,060perounceduring2020,thepriceofgoldhasdroppedroughly16%backto$17267,thelowendofitstradingrangeduringthelasttwoyears,whilethepriceofcopperhasbrokensignificantlybelow$4.00perpound,thelowendofaone-year$4-5range.Interestingly,electricvehicles––thebeneficiaryofaconsumerpreferenceshiftasenergypricessoar––require3-5xmorecopperthaninternalcombustionengines,suggestingthatcopper’sbreakdownisevenmoremeaningful.Finally,whiletheoilcartelandtheRussia-Ukrainewarhavepushedittolevelsonthehighendofexpectations,theoilpricedeclinedtothelowerendofthetradingrangeinplacesinceRussiainvadedUkraine.Inourview,Energy––thestrongest-performingsectorsincetherotationtocyclicalsbeganinFebruary2021––willbe

5AsofJune2022.

6AsmeasuredbyMarkitCDXNorthAmericaHighYieldIndex.AsofJune2022.

7AsofJuly12,2022.

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ARKINNOVATIONETFs–SecondQuarter2022

disruptedanddisintermediatedbyautonomouselectricvehiclesduringthenextfiveyears,leavingmanyinthecrowded“longoilandcommodities”trade8onthewrongsideofinnovation.

Innovationisthesourceofgooddeflationbecauselearningcurvescutcostsandincreaseproductivity.Inourview,manycompanieshavecateredtotheshort-term-oriented,risk-averseshareholders,satisfyingdemandsforprofits/dividends“now”.Asaresult,manyhaveleveragedtheirbalancesheetstobuybackstock,bolsterearnings,andincreasedividends.Insodoing,theyhavecurtailedinvestmentsininnovationandcouldbeill-preparedforthedisintermediationassociatedwithdisruptiveinnovation.Saddledwithagingproductsandservices,theycouldbeforcedtocutprices,servicedebt,andclearunwantedinventories,causingbaddeflation.

Ifwearecorrectinourassessmentthatgrowth,inflation,orbothwillsurpriseonthelowsideofexpectations,scarcedouble-digitgrowthopportunitiesshouldberewardedaccordingly.Theadoptionofnewtechnologiestypicallyacceleratesasconcernedbusinessesandconsumerschangetheirbehaviormuchmorerapidlythanotherwisewouldbethecase,givingnewleadershipanopportunitytosurfaceintheequitymarket.WebelievethecoronaviruscrisisandRussia’sinvasionofUkrainehavetransformedtheworldsignificantlyandpermanently,suggestingthatmanyinnovation-drivenstrategiesandstockscouldbeproductiveholdingsduringthenextfivetotenyears.

Inourview,thewallofworrybuiltonthebackofhighmultiplestocksbodeswellforequitiesintheinnovationspace.Thestrongestbullmarketsclimbawallofworry,afactthatthosemakingcomparisonstothetechandtelecombubbleseemtoforget.Nowallofworryexistedortestedtheequitymarketin1999.Thistimearound,thewallofworryhasscaledtoenormousheights.

Dominatingmostbroad-basedindexes,severalmega-capstocksseemtohaveluredrisk-aversebenchmark-sensitiveinvestorsintocrowdedtradesandawayfromemerginggrowthopportunitiescenteredondisruptiveinnovation.Inourview,investorsinbroad-basedequityindexesseemtobeshortinginnovation,perhapsinadvertentlyand,ifhistoryisanyguide,totheirdetriment.Asaresult,theycouldbemissinginvestmentopportunitieslikethenextAmazon,Apple,orTesla,companiesthatinvestaggressivelyattheexpenseofshort-termprofits.Foryears,asmanyinvestorsassumedthatitwouldgobankrupt,Amazoninvestedin

8“Longoilandcommodities”isthemostcrowdedtrade,

perBankofAmerica’sJuneFundManagerSurvey.

anefforttodisruptlegacybrickandmortarbusinesses,capturingadisproportionateshareoftheretaile-commerceopportunity.Inearlydays,WallStreetalsomissedthepotentialofApple’siPhonetodisruptNokia,Samsung,andBlackberry.Recently,italsodenigratedbitcoinandothercryptoassetsasPonzischemes.Inanotherexampleoftrulydisruptiveinnovation,traditionalautoanalystsdeemedTesladoomedtofailure:theydidnotunderstandthatTeslawasarobotics,energystorage,andartificialintelligencecompany,notanautocompany.Controversialandvolatileintheshort-term,companiesfocusedoninnovationthatsolvesproblemsanddisruptslegacyindustriescansurpriseontheupsidewithsignificantexponentialgrowthtrajectories.Inourview,activemanagementwillplayacrucialroleasmanydisruptivecompanieswillcompeteinwinner-take-mostmarkets.

Duringthesecondquarterof2022,ARK’ssixactivelymanagedETFsandthreeindexedETFsunderperformedrelativetotheS&P500IndexandtheMSCIWorldIndex.

TheARKAutonomousTechnologyandRoboticsETF(ARKQ)underperformedbroad-basedmarketindexesduringthequarter.Tesla(TSLA)andVelo3D(VLD)werethetopdetractors.Despiteastrongfirst-quarterearningsreportthatfeaturedrecorddeliveriesandoperatingmargins,sharesofTeslawereunderpressureassell-sideanalystscutdeliveryestimates,citingmacroheadwindsandsupplychainproblemsincludingtheShanghaishutdown.Inourview,thesefearswereshort-sightedandoverblown.Additionally,investorswereconcernedthatMusk’sproposedacquisitionofTwitterwouldproveadistraction.Disagreeingwiththeconventionalwisdom,wewereencouragedbyTesla’splanstoproduceasteering-wheel-lessandpedal-lessrobotaxivehiclein2024,itsstrongestcommitmenttorobotaxicommercializationtodate.SharesofVelo3DfellsharplyinAprilfollowinganSECfilingdisclosingpotentialsupply-chaindelaysintheshipmentoftwoofitsprintermodels.Despiteafirst-quarterearningsreporthighlightingincreaseddemandforitsproducts,arecordbacklog,andinvestmentsfromcompanieslikeSpaceX,Velo3D’ssharessuccumbedtoabroaderbasedsell-offininnovationstocks.

AmongthetopcontributorstoARKQ’sperformancewereBYD(BYDDY)andXpeng(XPEV).DespiteheadwindsfromCOVID’simpactontheChineseautoindustry,EVmanufacturerBYDreportedimpressiveresultsforfirst-quarternetincomeandvehiclesales.DefyingCOVID-relatedobstacles,thecompanyannounceda270%increaseinAprildeliveriesandanagreementtosupplybatteriestoTesla.SharesofChineseElectricvehiclemakerXpengralliedafterithitamilestoneof200,000cumulativeunits

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ARKINNOVATIONETFs–SecondQuarter2022

deliveredandShanghaiannouncedstimulusmeasures.

TheARKNextGenerationInternetETF(ARKW)

underperformedbroad-basedmarketindexesduringthequarter.AmongthetopdetractorswereCoinbaseGlobal(COIN)andtheGrayscaleBitcoinTrust(GBTC).SharesofCoinbasedepreciatedfollowinglowerthanexpectedfirst-quarterearningsandtheTerraecosystemcollapse.Asfirst-quarterresultsfellshortofanalysts’expectations,thecompanyunveiledplanstoforgoshort-termprofitabilityandincreaseinvestments.Coinbasealsofacedinternalchallenges,includinglayoffsandless-than-expectedtractioninitsNFTmarketplace.Despitetheheadwinds,Coinbaseprovidedseveralupdatestoitscryptopaymentoffering,CoinbaseCommerce,andlaunchedseveralnewproductsincludingitsfirstderivativesproduct,NanoBitcoinFutures,andSolanastaking.Inourview,Coinbaseisthepremier,regulatory-compliantcryptoplatformwithmajorcompetitiveadvantagesinanindustryasitconsolidates.SharesofGrayscaleBitcoinTrust,adigital-nativeassetmanagerthattracksbitcoin’smarketprice,depreciatedsignificantly,hurtbyitsperceptionasarisk-onasset––asopposedtoaninflationhedge––astheFedincreasedinterestrates.AstheTerraecosystemcollapsedinMay,contagionspreadtomajorcryptolenders,includingBlockfi,Celsius,Babel,Voyager,andCoinFlex,contributingtotheinsolvencyoftheoncehighlyrespectedhedgefund,ThreeArrowsCapital.GBTCpremiumrelativetoNAVdroppedto-31%astheSECdeniedGrayscaleaspotbitcoinETFapproval.

AmongthetopcontributorstoARKW’sperformancewereTwitter(TWTR)andVuzix(VUZI).SharesofTwitterappreciatedafterElonMuskdisclosedasignificantstakeinthecompanyandthenbidtopurchaseit.Inourview,MuskisavisionaryentrepreneurandactiveTwitteruserwhoseinvolvementcouldbenefitthecompanyinunexpectedways.VuzixsignedanexclusiveagreementtolicenseAtomistic’snext-generationmicro-light-emittingdiodedisplaysolution,withanoptiontoacquirethecompany.Withsufficientresearchanddevelopment,Atomistic’stechnologycoulddecreasethesizeofmicrodisplaysinARglasses,withoutsacrificingefficiency,toensurethatVuzix’sARglassesareergonomicandfashionable.

TheARKGenomicRevolutionETF(ARKG)underperformedbroad-basedmarketindexesduringthequarter.AmongthetopdetractorswereExactSciences(EXAS)andTeladocHealth(TDOC).Likesmallergenomicsstocksthatarenotinbroadbasedbenchmark,sharesofExactSciencessuffered.

Thecompanyownstwoofthelargestcancerdiagnosticfranchises:CologuardandOncotype.Inourview,ExactSciencescouldowntheoncologydiagnosticfunnelbylinkingscreeningandprognosticstests.SharesofTeladoc,thelargestglobaldigitalhealthplatform,fellsignificantlyafterthecompanyprojectedthatadjustedEBITDAwouldbe25%lowerthanitspreviousguidance,highlightingthatcompetitionforkeywordsinthetelehealthspace,particularlyinitsDTC(directtoconsumer)mentalhealthchannels,hadincreaseditscostofcustomeracquisition.Forperspective,thelasttimeittradedattheselevels,Teledocwascashflownegative,withvisitvolumesonly17%ofcurrentlevels,paidmembersat50%ofthecurrentnumber,andannualrevenue20%ofcurrentlevels.Today,1in6AmericansisafullmemberofTeladoc,andthecompanyiscashflowpositive.Ourfive-yearthesisforTeladocisbuiltarounditstransitionfromageneraltelehealthprovidertoaB2Benterprisesolutionforwhole-personhealthcare.

AmongthetopcontributorstoARKG’sperformancewereVertexPharmaceuticals(VRTX)and908Devices(MASS).DouglasMelton,founderofSemmaTherapeutics,leftHarvardUniversitytojoinVertexandfocusondiabetestreatments.InJune,thecompanyannouncedthatUSandEuro