Invest in Innovation and Curb Concentration Risk with BMO ARK Funds
July 2024
The BMO ARK Innovation Fund, BMO ARK Genomic Revolution Fund and BMO ARK Next Generation Internet Fund allow investors to invest in innovative platforms and products while diversifying their portfolios through exposures to unique hand-picked companies.
BMO GAM’s suite of ARK funds enables clients to gain targeted allocations to companies that are disrupting and innovating industries and sectors throughout the world economy. ARK’s active management approach and research capabilities provide the ability to take advantage of market inefficiencies, and position investors for growth that holds the potential to beat broad markets over the long term.
Additionally, the U.S. equity market has become even more concentrated with the top ten largest companies in the S&P 500 making up a whopping ~32% of the index—the highest concentration level of the last 30 years.
Weight of the Top 10 Stocks in the S&P 500 Index
Source: ARK Investment Management LLC, Data sourced from Morningstar, Monthly data as of March 31, 2024.
The Opportunity
Historically elevated concentration has left many investors over exposed to a handful of names, and potentially missing out on stronger longer-term performance from non-benchmark-oriented names. By allocating a portion of one’s portfolio to any of BMO’s ARK innovation strategies, investors can mitigate some mega-cap concentration risk while still investing in themes and individual companies that have growth potential.
If history serves as any guide, stock market breadth tends to broaden as bull markets strengthen over time. BMO’s ARK innovation lineup is well-positioned to benefit if breadth continues to improve, with all solutions averaging an active share of 97% vs. the S&P 500 Index and 95% vs the Nasdaq 100 Index, respectively,1 meaning company exposure/allocation within the BMO ARK funds is different from benchmarks, and investors are getting greater diversification into many different names.
The top 10 holdings in the S&P 500 varies greatly versus the BMO Ark Innovation Fund, BMO ARK Genomic Revolution Fund and BMO ARK Next Generation Internet Fund. See below for a detailed comparison.
Top Ten holdings S&P 500 Index vs BMO ARK Innovation Fund,2 BMO ARK Genomic Revolution Fund2 and BMO BMO ARK Next Generation Internet Fund2
Top 10 S&P 500 Index Holdings |
% of Index |
Microsoft Corp. |
7.18% |
NVIDIA Corp. |
6.32% |
Apple Inc. |
6.19% |
Amazon.com Inc. |
3.74% |
Meta Platforms Inc. |
2.37% |
Alphabet Inc. Class A |
2.34% |
Alphabet Inc. Class C |
1.98% |
Berkshire Hathaway Inc. |
1.65% |
Eli Lilly & Co. |
1.44% |
Broadcom Inc. |
1.40% |
Tesla Inc. |
11.93% |
Roku Inc. |
8.39% |
Coinbase Global Inc. |
8.19% |
Block Inc. |
6.67% |
Uipath Inc. |
5.53% |
CRISPR Therapeutics AG |
4.50% |
Roblox Corp. |
4.40% |
Robinhood Markets Inc. |
3.91% |
Zoom Video Communications Inc. |
3.64% |
Unity Software Inc. |
3.41% |
BMO ARK Genomic Revolution Fund
CRISPR Therapeutics AG |
7.02% |
Twist Bioscience Corp. |
6.71% |
Recursion Pharmaceuticals Inc. |
5.41% |
Exact Sciences Corp. |
5.16% |
Schrodinger Inc./United States |
4.62% |
Ionis Pharmaceuticals Inc. |
4.34% |
Intellia Therapeutics Inc. |
3.89% |
10X Genomics Inc. |
3.77% |
Ginkgo Bioworks Holdings Inc. |
3.54% |
Caredx Inc. |
3.41% |
BMO ARK Next Generation Internet Fund
3IQ Bitcoin ETF |
9.62% |
Tesla Inc. |
8.66% |
Roku Inc. |
8.25% |
Coinbase Global Inc. |
8.24% |
Block Inc. |
7.98% |
Roblox Corp. |
4.70% |
Robinhood Markets Inc. |
3.94% |
Unity Software Inc. |
3.89% |
Uipath Inc. |
3.34% |
Meta Platforms Inc. |
2.98% |
Advisors looking to maintain an exposure to technological innovation stocks yet diversify away from the top-heavy broad market, the BMO ARK funds represent efficient options for growth-oriented clients.
1 ARK Investment Management LLC, 2024, based on data from Morningstar as of March 31, 2024. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security.
2 Source: Morningstar, Holdings as of May 15, 2024.
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This article was published on July 5, 2024.
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