ARK Genomic Revolution Multi-Sector ETF (ARKG - Free Report) topped the list of the best performing ETFs of May, with impressive returns of about 13.6%. The rally was mainly driven by tax reform, rising M&A and positive regulatory backdrop.
The new tax legislation has enticed large pharmaceutical companies to bring offshore cash back home at reduced tax rates of 8-15.5% instead of the prior 35%. The repatriated money has led to an increase in mergers and acquisitions activity, share buybacks and dividends. Additionally, the slower growth in mature drugs has also compelled prominent biotechs to acquire smaller ones, even at hefty premiums, with promising pipelines.
Further, Trump’s most-awaited plan to lower drug prices has added to the strength. If these were not enough, the sector’s non-cyclical nature is an advantage in the current market, which is ruffled by political instability in Europe, trade war fears between China and United States, as well as geopolitical tension (read: Pharma & Biotech ETFs Soar on Trump's Drug Plan).
Let’s take a closer look at the fundamentals of ARKG.
ARKG in Focus
This is an actively managed ETF focusing on companies that are expected to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, improvements and advancements in genomics into their business. The fund holds 38 stocks in its basket with heavy concentration on the top firm at 11.2% while other firms hold no more than 7.52% share.
ARKG is focused on small-cap stocks accounting for 67% of the portfolio while large and mid-caps make up for 21% and 12% share, respectively. From an industrial look, biotechnology makes up for 71% of the portfolio while pharmaceuticals takes the next spot at 18%. The product has amassed $176.2 million in its asset base and trades in a good average daily volume of around 93,000 shares. The expense ratio comes in at 0.75% (read: Why These Small Cap Biotech ETFs are Soaring).
Though most of the stocks in the fund’s portfolio delivered strong returns, a few were the real stars, having gained more than 30%. Below we have highlighted those five best-performing stocks in the ETF with their respective positions in the fund’s basket:
Best Performing Stocks of ARKG
Organovo Holdings Inc. (ONVO - Free Report) : The stock has surged about 55.6% this month. It currently carries a Zacks Rank #2 (Buy) and has a VGM Score of F. The stock saw no earnings estimates revision in a month and has estimated earnings growth rate of 22.7% for this fiscal (ending March 2019). ONVO occupies the #17 spot in the fund’s basket with 2.5% of the total assets.
CRISPR Therapeutics AG (CRSP - Free Report) : This stock takes the sixth position in the fund’s basket with 3.9% allocation. It has also delivered incredible returns of 55.2% in May. The Zacks Consensus Estimate for 2018 narrowed from a loss of $2.82 to a loss of $2.60, representing a year-over year decline of 68.08%. CRISPR Therapeutics has a Zacks Rank #1 (Strong Buy) and a VGM Score of F. You can see the complete list of today’s Zacks #1 Rank stocks here.
NanoString Technologies Inc. (NSTG - Free Report) : This stock takes the #11 spot in the fund’s basket with 3.1% of the assets. It has gained 36.5% in May and saw no earnings estimate revision this month. However, its earnings are expected to decline 51.63% for this year. NanoString currently has a Zacks Rank #3 (Hold) and a VGM Score of F.
Invitae Corporation (NVTA - Free Report) : The stock has surged nearly 35.2% in May. It carries a Zacks Rank #3 and a VGM Score of F. The stock has seen positive earnings estimate revision of seven cents for this year over the past month and its earnings are expected to grow 18.49%. The stock occupies the fourth position and accounts for 6.5% share in ARKG (see: all the Healthcare ETFs here).
Foundation Medicine Inc. : The stock has gained about 34.4% this month. It has seen positive earnings estimate revision of a penny for this year over the past month with an expected earnings growth rate of 4%. Foundation Medicine currently has a Zacks Rank #3 and a VGM Score of F. The stock occupies the #27 position in the fund’s portfolio, making up for 1.2% share.
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